Catenaa, Wednesday, November 05, 2025- A federal appeals court in Denver last week upheld the Federal Reserve’s discretion to deny Custodia Bank access to a master account, maintaining the exclusion of crypto-focused banks from the US central banking system.
The Tenth Circuit Court of Appeals, in a 2–1 ruling, affirmed a lower court decision that while Custodia is technically eligible under Wyoming’s Special Purpose Depository Institution (SPDI) charter, eligibility does not guarantee entitlement.
Judge David Ebel wrote that the Fed’s authority to reject requests is critical to “safeguard the financial system.” Custodia, which specializes in custody and settlement of digital assets, argued the exclusion was unfair.
The ruling keeps crypto banks, including Custodia, locked out of Fed payment systems that provide direct access to clearing and wire transfers.
In dissent, Judge Timothy Tymkovich said the Fed statutes require payment services for all eligible non-member banks, describing the issue as a modern iteration of longstanding banking discretion.
The decision comes amid shifting policy discussions. Federal Reserve officials, including Governor Christopher Waller, have floated “skinny master accounts” that could allow crypto-focused banks limited access to Fed payment rails.
These accounts would impose balance caps, no interest, and no overdraft privileges, aiming to support innovation while limiting systemic risk.
Custodia described the ruling as “disappointing” but cited the dissent as support for potential rehearing. No crypto-focused bank has yet received full master account access, leaving the industry reliant on partnerships with traditional banks for payment system integration.
The development underscores ongoing tension between regulatory caution and the push for broader inclusion of digital-asset financial institutions in the US banking infrastructure.
