The post Custodia Bank’s Master Account Denial Upheld by Appeals Court appeared on BitcoinEthereumNews.com.

Darius Baruo
Nov 01, 2025 13:38

The Tenth Circuit Court has upheld the Federal Reserve’s decision to deny Custodia Bank a master account, reinforcing the Fed’s authority over crypto banks’ access to U.S. payment systems.

An appellate court has ruled against Custodia Bank in its pursuit of a Federal Reserve master account, marking a significant setback for the Wyoming-based crypto-focused institution. The decision by the U.S. Court of Appeals for the Tenth Circuit supports an earlier ruling from the District of Wyoming, which favored the Federal Reserve’s stance. Tenth Circuit Upholds Fed’s Decision The court’s decision is a continuation of Custodia’s five-year battle for direct access to the U.S. banking system via a master account. This account is crucial for banks to engage directly with the Federal Reserve’s payment systems. The three-judge panel found that the Federal Reserve acted within its rights, leaving the decision to deny the application intact. This confirms the central bank’s broad discretion in deciding which financial institutions can access its infrastructure. Custodia, formerly known as Avanti Bank, applied for a master account in October 2020 after obtaining a special-purpose depository institution charter from Wyoming. Despite the typical week-long processing time, the application was unresolved for over 19 months. In January 2023, the Federal Reserve Bank of Kansas City rejected the application citing concerns over “safety and soundness” due to the bank’s focus on digital assets. Concerns Over Crypto Market Volatility The Federal Reserve argued that Custodia’s reliance on the volatile crypto market posed significant risks. It also highlighted the bank’s limited experience in traditional risk management and the potential systemic risks of direct access to a crypto-centered institution. Custodia’s legal battle included a lawsuit filed in June 2022 against the Federal Reserve, claiming an “unlawful delay” in…

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Filed under: News - @ November 2, 2025 2:21 am