Custodia Bank asks 10th Circuit to take another look — this time en banc — after losing fight for Fed master account After a 2-1 loss in October, crypto-focused Custodia Bank has asked the U.S. Court of Appeals for the 10th Circuit to rehear its case "en banc" — a rare step that would bring all 19 judges on the court to revisit whether the Federal Reserve must grant the bank a coveted master account. Custodia is pursuing the extraordinary procedure after a three-judge panel upheld the Fed’s discretion to deny master accounts to institutions it views as potential risks to financial stability. Why an en banc rehearing matters An en banc rehearing is only granted in exceptional cases — for example, when an issue is of unusual public importance or when prior rulings conflict — and the courts rarely allow it. Custodia argues its case meets that threshold, saying the dispute raises weighty questions about federal authority, states’ rights over bank charters, and the constitutional limits on decisions made by mid-level Fed officials. What’s at stake: the master account Master accounts give banks direct access to the Federal Reserve’s payment services, enabling them to move money nationwide and operate on a national scale. For a bank, especially one seeking to serve customers across the U.S., a master account is essentially indispensable. Custodia warned the court that denying such access “all but sentences the bank to death.” Background and current landscape Custodia operates under a Wyoming special purpose depository institution (SPDI) charter and has repeatedly sought a Fed master account without success. To date, the Fed has not granted master accounts to crypto-focused banks, even as political and regulatory conversations around crypto have shifted in recent years. The October ruling and judicial view In October, a 10th Circuit panel — including judges appointed by both Republican and Democratic presidents — affirmed a 2024 decision that the Fed may reject master account applications when it determines a bank could threaten the stability of the U.S. banking system. “We reject Custodia’s attempt to impair the Fed’s ability to safeguard our nation’s financial system through the exercise of discretion to reject master account access,” Judge David Ebel wrote; Ebel was appointed to the court in 1988 by President Ronald Reagan. What comes next Custodia’s en banc request sets up a high-stakes appellate test of how far the Fed’s gatekeeping power reaches over access to core banking infrastructure. If the 10th Circuit agrees to rehear the case en banc — an unlikely outcome statistically — the decision could have major implications for crypto banks, state-chartered institutions, and the balance of regulatory authority in U.S. banking. Read more AI-generated news on: undefined/news

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