US court upholds Federal Reserve ruling, rejects Custodia's request for a rehearing on main account application

PANews March 15th news, according to The Block, the U.S. Tenth Circuit Court of Appeals rejected Custodia Bank's request for a rehearing by the full panel with a 7-3 vote, upholding the October 2025 panel decision that the Federal Reserve has the authority to approve or deny master account applications from eligible institutions. Notably, just a few days ago, the Kansas City Federal Reserve granted the first limited crypto master account to an exchange, and 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 Federal Reserve Bank confirmed in early 2021 that there were "no significant issues" with the application, but ultimately rejected it in January 2023, citing concerns about the bank's crypto-focused business model. Custodia filed a lawsuit in June 2022, initially targeting the 19-month approval delay, and later arguing that the National Bank Act grants any eligible depository institution the legal right to obtain a master account. Courts at all levels dismissed the lawsuit.