Custodia Bank Seeks En Banc Rehearing After Federal Reserve Denies Master Account
Custodia Bank has petitioned the 10th U.S. Circuit Court of Appeals for an en banc rehearing following an October ruling that denied the bank a Federal Reserve master account. This unusual legal procedure would involve all 19 judges of the 10th Circuit and reflects the bank's argument that the case presents issues of national importance, undermines states’ banking rights, and raises constitutional questions about the authority of Federal Reserve officials.
Master accounts are crucial for banks that seek direct access to the Federal Reserve's payment system, enabling them to operate nationwide. Custodia currently holds a Wyoming Special Purpose Depository Institution (SPDI) charter but has yet to receive a master account from the Fed, as no crypto-focused bank has been granted one so far.
In October, a 2-1 panel of the 10th Circuit upheld the Fed’s discretion to reject master account applications, with Judge David Ebel authoring the majority opinion. Custodia contends that the denial threatens the bank’s survival and continues to challenge the Fed's decision through its ongoing legal fight.
