The Blockchain Association has formally backed Custodia Bank's Supreme Court petition, filing an amicus brief that urges justices to review whether regional Federal Reserve Banks may deny master account access to state-chartered institutions that otherwise meet legal eligibility requirements. The industry group warned that lower court rulings could create “a blueprint for federal regulators to debank disfavored industries or companies in the future without interference from state regulators.”
A Fed master account grants direct access to the central bank's payment systems, reducing reliance on correspondent banks. Custodia, a Wyoming-chartered digital asset bank founded by Caitlin Long, first applied in October 2020. The Kansas City Fed denied the application in January 2023, citing concerns about the bank's crypto-focused business model. Custodia sued in June 2022 over the 19-month processing delay, lost in district court in 2024, and lost again at the Tenth Circuit in 2025. The full appeals court denied an en banc rehearing by a 7-3 vote in March 2026.
Custodia's Supreme Court petition, docketed July 14 as Custodia Bank, Inc. v. Federal Reserve Board of Governors, et al., asks the court to interpret the Monetary Control Act, which states Federal Reserve services “shall be available” to eligible nonmember depository institutions. The Kansas City Fed is due to respond by Sept. 11. Custodia argues the law does not give regional Fed banks unlimited discretion to refuse access.
The filing comes after the Kansas City Fed granted Kraken Financial a limited-purpose master account in March 2026, making it the first crypto-native institution to receive one. That account provides access to core payment rails for high-value dollar settlement but excludes interest on reserve balances and discount window borrowing. The Federal Reserve has since proposed a restricted payment account framework and asked regional Fed banks to pause Tier 3 master account decisions until the rulemaking process wraps up Dec. 31, 2026. The Blockchain Association said the case is about ensuring “lawful digital asset businesses can compete on equal footing.”
