Custodia Bank seeks Supreme Court review of Federal Reserve’s master account denial

The Wyoming crypto bank is taking its fight over Fed access to the highest court in the land, raising existential questions about who gets to plug into America's payment system.

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Add us on Google by Editorial Team May. 29, 2026

Custodia Bank, the Wyoming-chartered digital asset bank that has been locked in a legal cage match with the Federal Reserve since 2022, is preparing to ask the US Supreme Court to weigh in on a deceptively simple question: can the Fed deny master accounts to eligible banks without any real limits on its discretion?

A long road to the highest court

Custodia, a Special Purpose Depository Institution focused on digital assets, first applied for a Federal Reserve master account back in October 2020. A master account is essentially a bank’s ticket to the Fed’s payment rails, the infrastructure that lets financial institutions move money, settle transactions, and interact with the broader banking system.

The Fed said no in January 2023, citing concerns about digital asset risks tied to Custodia’s crypto-focused business model.

Custodia didn’t take it quietly. The bank had actually sued the Federal Reserve Board months earlier, in June 2022, arguing that the Fed lacked authority to reject an application from a statutorily eligible depository institution.

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The district court disagreed, ruling against Custodia in 2024. The 10th Circuit Court of Appeals affirmed that decision on October 31, 2025. Then, on March 13, 2026, the 10th Circuit denied Custodia’s petition for en banc rehearing by a vote of 7-3.

Three dissenting judges is notable. It suggests meaningful disagreement on the bench about the scope of the Fed’s discretion, particularly regarding what the denial means for state chartering authority.

On May 22, 2026, Custodia filed for a 30-day extension to submit its petition for a writ of certiorari. The new deadline is July 11, 2026.

Why master accounts matter

Custodia CEO and founder Caitlin Long has called the denial a “death sentence” for the bank’s operations. Without direct Fed access, Custodia’s entire value proposition erodes.

The legal question at the heart of the case is whether the Monetary Control Act and related statutes give the Federal Reserve Banks unlimited discretion to deny master accounts, or whether eligible institutions have some form of legal entitlement to access. If the Fed can effectively override a state’s decision to charter a bank by simply refusing it access to the payment system, that’s a significant rebalancing of federal and state power.

The Kraken variable

In March 2026, Kraken was granted a limited master account, providing an alternative pathway into the Fed’s payment infrastructure for a crypto-adjacent entity.

As of late May 2026, Custodia had not filed its full cert petition but appears to be pursuing both tracks, preparing the Supreme Court filing while reportedly considering a limited account application.

What this means for investors

If the Supreme Court agrees to hear the case and rules in Custodia’s favor, it would establish a precedent that the Fed cannot use master account denials as a de facto veto over state banking charters. If the Court declines to hear the case, or upholds the Fed’s discretion, direct access to the payment system remains subject to the Fed’s discretion rather than state law.

The July 11 deadline for Custodia’s cert petition is the next date to watch. The Supreme Court typically decides whether to grant certiorari within a few months of receiving a petition, meaning a decision on whether this case gets heard could come by late 2026.

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