Custodia Bank Loses Appeal in Federal Reserve Master Account Battle
Custodia Bank, the crypto-focused institution founded by Caitlin Long, faced another legal setback as its appeal for a Federal Reserve master account was denied. The Wyoming-based bank sought direct access to the Fed's payment system, aiming to bypass intermediary banks, but the Federal Reserve Bank of Kansas City rejected its application in 2023 over concerns about its banking practices.
The appeals court upheld the earlier dismissal of Custodia's lawsuit, which accused the Fed of unlawful delay and collusion. Judge Scott Skavdahl ruled that federal law does not require the central bank to grant master accounts to all applicants. The decision underscores the regulatory hurdles facing crypto-native banks seeking full integration into traditional financial systems.
