Custodia Bank, a Wyoming-chartered crypto-assets custody institution, has petitioned the full U.S. Court of Appeals for the Tenth Circuit for an en banc rehearing of a divided panel’s October 2025 ruling that affirmed the Federal Reserve‘s discretion to deny it a master account. A master account allows direct access to the Federal Reserve‘s payment systems, enabling efficient nationwide transactions and settlement services.
Custodia, operating under Wyoming‘s special purpose depository institution (SPDI) charter, applied to the Federal Reserve Bank of Kansas City in 2020.
After a 27-month review, the Kansas City Fed denied the application in January 2023, citing risks to financial stability posed by Custodia’s digital asset-focused model.
Custodia sued the Federal Reserve Board and the Kansas City Fed in June 2022, arguing that the Monetary Control Act of 1980 mandates access to Fed services for eligible depository institutions.
The Act states that such services “shall be available” to nonmember banks meeting statutory criteria.
A Wyoming federal district court dismissed the case in 2024, upholding the Fed’s discretionary authority.
On appeal, a three-judge Tenth Circuit panel affirmed in a 2-1 decision on October 31, 2025.
Judge David Ebel, a Reagan appointee, authored the majority opinion, rejecting Custodia‘s interpretation and emphasizing the Fed’s need for flexibility to protect the nation’s financial system from potential threats.
The majority held that regional Reserve Banks retain discretion to reject master account applications, even from legally eligible institutions.
One judge dissented, though specifics of the dissent were not detailed in public reports.
In its December 15, 2025, en banc petition, Custodia contends that the panel misinterpreted the Monetary Control Act by converting mandatory language into permissive discretion.
The bank argues this grants the Fed “unreviewable discretion” over core payment infrastructure, effectively overriding state charters and eroding states’ authority to regulate banking.
The petition further asserts the ruling raises constitutional concerns, including delegation of significant power to officials not properly appointed under Article II and broader separation-of-powers issues.
Custodia warns that denial of a master account severely restricts its operations, describing it as tantamount to a “death sentence” for national-scale banking.
Attorneys for the bank emphasize the case’s national importance, particularly for seemingly innovative state-chartered institutions in the digital asset sector.
En banc rehearings are rarely actually granted, and are said to be reserved for matters of exceptional significance or circuit conflicts.
No crypto or digital assets focused bank has yet received a Federal Reserve master account, making the outcome potentially pivotal for the industry’s integration into traditional payment rails.