Custodia asks full appeals court to reconsider Fed master account denial

Wyoming-based crypto bank Custodia filed a new petition in its long-running legal battle against the Federal Reserve for access to a master account, requesting a rehearing en banc before the full Tenth Circuit Court of Appeals.

Custodia Bank is asking the court to reconsider its October ruling that sided with the Fed in denying the bank access to core central bank payment services, in a fight that has become a pacesetter for crypto banking access to the U.S. payments system.

In the petition for rehearing en banc filed on Dec. 15, Custodia is urging all active judges on the court, not just the original three-judge-panel, to revisit the October decision that upheld the Fed’s authority to deny master accounts even to state-chartered, federally supervised banks.

Custodia argued that the three-judge panel’s ruling improperly vests the Fed with “unreviewable discretion” over access to core payment infrastructure, undermining state banking authority and raising “serious constitutional questions” by entrusting that power to officials not appointed as officers of the United States under Article II of the Constitution.

The petition also argued that the panel misread the Monetary Control Act, which states that Federal Reserve services “shall be available” to eligible depository institutions. The bank contends the ruling improperly converts that language into optional discretion, allowing regional Federal Reserve banks to effectively override state banking charters.

The October ruling marked another setback for Custodia, which has litigated its exclusion from the Fed’s payment infrastructure since it first sued the Federal Reserve in 2022. Whether the full Tenth Circuit agrees to rehear the case remains uncertain, but the petition ensures the debate over crypto banks’ access to the financial plumbing is far from over.