Efe Nail Saltık 
Custodia Bank has initiated an appeal following a recent setback in court where a judge ruled against its entitlement to a Federal Reserve (Fed) master account.
Based in Wyoming and specializing in cryptocurrency services, Custodia Bank lodged an appeal in response to a court ruling that upheld the Fed’s refusal to grant it a master account. The decision by a federal judge affirmed the Kansas City Fed‘s authority to reject Custodia’s application for such an account. The court found that Custodia had failed to furnish substantial evidence to support its allegations that the Federal Reserve’s Board of Governors had unlawfully influenced the Kansas City branch to reject its master account application. This master account would have enabled Custodia to directly access Federal Reserve services without relying on intermediary banks.
The legal outcome follows years of litigation initiated by Custodia, alleging undue delay by the Fed in reaching a decision. After the formal denial of its master account application by the Fed, Custodia, led by Caitlin Long, a key figure in Wyoming’s special purpose depository institution legislation, pursued the lawsuit anew.
In his ruling last month, Judge Scott Skavdahl underscored the importance of Federal Reserve Banks retaining discretion in processing master account applications. He argued that without such discretion, state chartering laws would become the sole barrier safeguarding the integrity of the U.S. financial system. Skavdahl warned against a potential “race to the bottom” among states, where relaxed legislation could attract businesses seeking minimal regulatory oversight, thus granting them unrestricted access to central bank services.
Following the court’s decision, a spokesperson for Custodia stated that the company was evaluating its options. Additionally, Custodia objected to the Fed’s motion to recover legal fees, citing the ongoing appeal and expressing concerns that awarding such fees could deter future legal challenges against government or quasi-government entities.
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