U.S. Court Upholds Fed’s Rejection of Custodia Bank’s Master Account Application
The U.S. 10th Circuit Court of Appeals has ruled in favor of the Federal Reserve, affirming its decision to deny Custodia Bank a master account. This MOVE effectively blocks crypto-focused banks from accessing the central banking system, dealing a blow to the industry's integration with traditional finance.
Custodia Bank, which applied for the account in 2020 to bridge crypto and traditional banking, saw its request rejected after a 19-month review. The Fed cited concerns over weak risk management in the bank's crypto-centric business model. While Custodia argued the denial was unlawful, the court upheld the Fed's discretionary authority to safeguard financial stability.
Judge David Ebel emphasized that eligibility does not guarantee access, noting the Fed's supervisory role in protecting the financial system. A dissenting opinion from Judge Timothy Tymkovich offers a glimmer of hope for future challenges.
