U.S. Court Upholds Fed’s Decision to Deny Custodia’s Master Account Application

ChainCatcher report, according to The Block, the U.S. Court of Appeals for the Tenth Circuit denied Custodia Bank’s request for an en banc rehearing in a 7-3 vote, upholding the panel’s October 2025 ruling that the Federal Reserve has the authority to approve or deny master account applications from eligible institutions. Notably, just days earlier, the Kansas City Fed granted Kraken its first limited cryptocurrency master account, while the Federal Reserve is also developing a broader “streamlined master account” framework. Custodia is a Wyoming-chartered special-purpose depository institution founded by Wall Street veteran Caitlin Long. The company first applied for a master account in October 2020. The Kansas City Fed initially confirmed in early 2021 that the application “presented no significant issues,” but ultimately rejected it in January 2023 due to concerns over the bank’s business model focused on cryptocurrency. Custodia filed a lawsuit in June 2022, initially challenging the 19-month delay in approval, and later argued that the Monetary Control Act grants any eligible depository institution a legal right to a master account. All levels of the courts have dismissed this lawsuit.