The Blockchain Association filed an amicus brief on Wednesday urging the US Supreme Court to hear Custodia Bank's challenge to the Federal Reserve's denial of a master account, arguing that federal law requires the Fed to make its payment services available to eligible nonmember depository institutions and that regional Reserve Banks should not have broad discretion to refuse.
Custodia, a Wyoming-chartered special purpose depository institution, applied for a master account in 2020. The Federal Reserve Bank of Kansas City rejected the application in 2023, and the Tenth Circuit Court of Appeals later ruled the regional Fed bank had discretion to deny the request — the ruling Custodia is now asking the Supreme Court to review. A master account would let Custodia settle payments directly with the central bank rather than routing through an intermediary bank, along with access to Fedwire and, depending on account type, interest on reserves held at the Fed. The Blockchain Association's brief frames the stakes beyond Custodia specifically: allowing the appeals court's ruling to stand, the group argues, would give the Fed effectively unchecked power to exclude any lawful industry from the payment system through administrative discretion rather than a defined legal standard. The Kansas City Fed is due to respond to Custodia's petition by September 11.
The case is harder to frame as a simple story of crypto being locked out of the banking system, because another Wyoming-chartered crypto bank has already gotten through the same door. Blockhead reported in March that Kraken Financial secured its own Fed master account , becoming the first crypto-native institution in US history to hold one — a "skinny" account that excludes interest on reserves but still grants direct Fedwire settlement access. Kraken co-CEO Arjun Sethi framed the approval as the convergence of crypto infrastructure and sovereign financial rails; Custodia, notably, congratulated Kraken publicly on the approval while noting it would continue pursuing its own master account in parallel with expanding bank partnerships. That divergence is the actual legal question at the heart of Custodia's petition: if one similarly chartered, similarly regulated crypto bank can get a master account and another can't, is that a legitimate exercise of case-by-case Fed discretion, or evidence the discretion itself has no real legal limit and is being applied inconsistently.
The Blockchain Association's brief is explicit that it isn't arguing for special treatment — it wants the Court to clarify the boundary of Fed discretion under the Monetary Control Act for any eligible institution, crypto or not. That framing matters because Custodia's case is now proceeding alongside a broader shift Blockhead has tracked all year: Circle, Ripple, BitGo, Fidelity Digital Assets, and Paxos have all secured conditional trust or banking approvals of varying kinds, without needing a master account specifically. A Supreme Court ruling that narrows the Fed's discretion would matter less for how many firms are already operating inside the banking system than for how predictable that path becomes for the next one — replacing a process each firm currently has to litigate or negotiate individually with a clearer legal standard everyone can plan around.
