Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesEarnSquareMore
Custodia is not entitled to a Fed master account, judge rules

Custodia is not entitled to a Fed master account, judge rules

The BlockThe Block2024/03/30 00:49
By:The Block

Custodia Bank sued the central bank in 2022 for delaying a decision on getting a master account. A judge ruled on Friday that the Federal Reserve does not have to give the bank access to a master account.

Custodia is not entitled to a Fed master account, judge rules image 0 The Federal Reserve does not have to give digital asset bank Custodia access to a master account, a judge ruled on Friday.

Federal Reserve Banks have discretion in whether or not to grant master accounts, said Judge Scott Skavdahl in the U.S. District Court in the District of Wyoming in his judgment . The news is a blow to Custodia Bank, which sued the Federal Reserve Board of Governors and the Federal Reserve Bank of Kansas City in 2022 for delaying a decision on its application for a central bank master account. 

That master account allows institutions direct access to the Fed's payment systems and provides the most direct access to the U.S.'s money supply available to financial institutions. Those without master accounts are often forced to rely on partner banks with master accounts to provide services. 

"If Custodia's position was correct, it would effectively mean that every depository institution chartered under the laws of a state, regardless of how soundly crafted, is entitled to a master account allowing it direct access to the federal financial system," the judge said. 

According to the court document, Custodia alleged that the Federal Reserve Board violated the Administrative Procedures Act and said its actions were "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." Custodia asked the judge to compel the board to issue a master account. The APA governs how federal agencies develop and issue rules. 

The court stamped out the APA claim, in part because the board did not take a final action. 

No master account

Custodia is not statutorily entitled to a master account, the judge said

"The real dispute at the heart of this case is whether FRBKC must grant a master account to Custodia because it was legally eligible or whether FRBKC possessed the discretion to deny Custodia's master account application despite its eligibility," the judge said. 

Custodia filed its application with the Kansas City Fed in 2020. In the spring of 2021, the Federal Reserve Board of Governors intervened and sought control of the decision-making process. 

Custodia's request for a master account was denied in January 2023. Custodia did not immediately respond to a request for comment. 

Custodia is subject to Wyoming law and is a special purpose depository institution, which are banks that receive deposits and can custody, among other activities. However, they cannot lend "customer fiat deposits" and have to hold those deposits 100 percent in reserve, according to Custodia's website . 

0

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

PoolX: Earn new token airdrops
Lock your assets and earn 10%+ APR
Lock now!

You may also like

2025 TGE Survival Ranking: Who Will Rise to the Top and Who Will Fall? Complete Grading of 30+ New Tokens, AVICI Dominates S+

The article analyzes the TGE performance of multiple blockchain projects, evaluating project performance using three dimensions: current price versus all-time high, time span, and liquidity-to-market cap ratio. Projects are then categorized into five grades: S, A, B, C, and D. Summary generated by Mars AI This summary was generated by the Mars AI model, and the accuracy and completeness of its content are still being iteratively updated.

MarsBit2025/11/28 16:26
2025 TGE Survival Ranking: Who Will Rise to the Top and Who Will Fall? Complete Grading of 30+ New Tokens, AVICI Dominates S+

Mars Finance | "Machi" increases long positions, profits exceed 10 million dollars, whale shorts 1,000 BTC

Russian households have invested 3.7 billion rubles in cryptocurrency derivatives, mainly dominated by a few large players. INTERPOL has listed cryptocurrency fraud as a global threat. Malicious Chrome extensions are stealing Solana funds. The UK has proposed new tax regulations for DeFi. Bitcoin surpasses $91,000. Summary generated by Mars AI. The accuracy and completeness of this summary are still being iteratively updated by the Mars AI model.

MarsBit2025/11/28 16:26
Mars Finance | "Machi" increases long positions, profits exceed 10 million dollars, whale shorts 1,000 BTC

How much is ETH really worth? Hashed provides 10 different valuation methods in one go

After taking a weighted average, the fair price of ETH exceeds $4,700.

ForesightNews 速递2025/11/28 15:05
How much is ETH really worth? Hashed provides 10 different valuation methods in one go

Dragonfly partner: Crypto has fallen into financial cynicism, and those valuing public blockchains with PE ratios have already lost

People tend to overestimate what can happen in two years, but underestimate what can happen in ten years.

深潮2025/11/28 14:53
Dragonfly partner: Crypto has fallen into financial cynicism, and those valuing public blockchains with PE ratios have already lost