Wyoming Crypto Bank Demands Full Court Review After Fed Slams Door on Account Access

A Wyoming-based crypto bank isn't taking 'no' for an answer. After the Federal Reserve denied its application for a master account—the golden ticket to the U.S. payment system—the institution is escalating its fight. It just filed a formal petition demanding a full court review, arguing the Fed's move stifles financial innovation and contradicts the state's pioneering legal framework.

The Legal Chess Move

This isn't a simple appeal. The petition pushes the case into a broader judicial arena, challenging the Fed's authority and its interpretation of what constitutes a legitimate banking entity. The crypto bank's argument hinges on its status as a Special Purpose Depository Institution (SPDI) chartered under Wyoming law—a structure designed specifically for digital assets. The Fed's denial, they claim, undermines state sovereignty and sets a dangerous precedent for any new entrant that doesn't fit the traditional mold.

Why a Master Account Matters

Without direct access to the Fed's master account, crypto banks are forced to route transactions through intermediary banks. That adds layers of cost, complexity, and risk—like trying to run a modern logistics hub with only a single, toll-heavy backroad. It puts them at a severe competitive disadvantage and keeps digital asset businesses on the fringes of the formal financial system, which seems to be exactly how the old guard likes it.

A Test for the New Frontier

The outcome of this review could become a landmark decision. It's a direct clash between progressive state-level crypto regulation and the federal gatekeepers of monetary policy. A win for the crypto bank would tear down a major barrier to entry, potentially unleashing a wave of blockchain-integrated financial services. A loss would reinforce the walls of the fortress—proving that sometimes, the most innovative thing about finance is its ability to protect its own turf with bureaucratic red tape.

The Fed's caution is understandable, given its mandate for stability. But innovation rarely asks for permission. This legal battle is more than a dispute over an account; it's a referendum on whether the future of finance will be built within the system, or in spite of it. One thing's certain: the traditional playbook of slow-walking disruption until it goes away isn't working this time.

State Banking Authority Under Threat

The filing raises federalism concerns about the Fed effectively overriding Wyoming’s 2020 decision to charter Custodia as a Special Purpose Depository Institution.

Without master account access, the bank cannot utilize Core Federal Reserve payment services, including wire transfers and automated clearinghouse systems, rendering its state-issued charter largely meaningless despite meeting all statutory eligibility requirements.

“When the Fed denies a master account to a state-chartered financial institution, it effectively vetoes a bank charter that State regulators have approved,” the petition states.

Wyoming created its SPDI framework specifically to attract digital asset companies, requiring 100% reserve backing and prohibiting lending to reduce risk.

Custodia argues the Fed’s rejection undermines this carefully crafted state regulatory regime designed to foster blockchain innovation within stringent safety parameters.

The constitutional implications extend beyond federalism.

Custodia’s legal team contends that if regional Reserve Bank presidents hold unreviewable discretion over master accounts, they effectively become “” wielding significant executive authority without proper constitutional appointment.

Federal Reserve Bank presidents are selected by private bank directors and approved by the Board of Governors, a process Custodia argues violates the Appointments Clause if those officials exercise the discretionary power the majority opinion affirmed.

Deep Judicial Split Emerges

The petition highlights growing disagreement among Tenth Circuit judges on statutory interpretation.

Judge Timothy Tymkovich’s dissent joined Judge Bacharach’s 2017 opinion in Fourth Corner Credit Union v. Federal Reserve Bank of Kansas City, creating a 2-2 split among circuit judges on whether the Monetary Control Act mandates master account access.

Tymkovich wrote that the Fed’s interpretation grants “unreviewable discretion” that raises “thorny questions” under Article II while contradicting the MCA’s plain language, which requires services to be “available to nonmember depository institutions.“

The Kansas City Fed denied Custodia’s application in January 2023 after 27 months of review, citing risks from its “” despite initially telling the bank there were “no showstoppers” with its application.

A federal appeals court in Denver has upheld the Federal Reserve’s right to deny crypto-focused bank @custodiabank access to a master account.#Crypto #Custodiahttps://t.co/MAHuPSXT5x

Internal Fed documents revealed that staff deemed Custodia’s capital “” and praised its “impressive” executive team, only for Board of Governors officials to intervene.

Federal Reserve Governor Christopher Waller has since acknowledged publicly that the Fed possesses sufficient tools to manage risks without denying master accounts entirely.

In an October interview, Waller suggested the Fed can “” account structures to match individual bank risk profiles, undermining the necessity argument for blanket denials.

OCC Exposes Systematic Crypto Debanking

Custodia’s legal fight unfolds as federal regulators confront widespread debanking practices targeting crypto firms.

The Office of the Comptroller of the Currency released findings in December showing all nine largest national banks imposed “” restrictions on lawful businesses, including digital asset companies, between 2020 and 2023.

JPMorgan Chase, Bank of America, Citibank, Wells Fargo, and others maintained internal policies requiring escalated approvals or imposing blanket restrictions on sectors deemed to conflict with institutional values.

The review examined thousands of complaints about political and religious debanking, as well as crypto exclusions.

@USOCC reveals nine major banks, including @jpmorgan “debanked” crypto and other lawful industries with inappropriate restrictions #CryptoNews #Bankinghttps://t.co/hZYJOCY88v

Banks insisted they did not discriminate, but the OCC found many restrictive policies were publicly visible.

In fact, Strike CEO Jack Mallers recently claimed his accounts were abruptly closed under vague references to “,” fueling allegations of coordinated exclusion despite regulatory denials.

The controversy intensified after President TRUMP signed an executive order in August intended to prevent banks from debanking customers solely for crypto-related activity.