The Blockchain Association is asking the Supreme Court to take up Custodia's case, arguing that the Federal Reserve's broad authority over 'master accounts' could be used to push crypto firms out of the banking system. The trade group filed an amicus brief this week, backing the crypto bank's petition for review after lower courts sided with the Fed.
The case so far
Custodia, a Wyoming-based digital asset bank, has been fighting for a master account with the Federal Reserve since 2020. A master account gives a bank direct access to the Fed's payment system, which Custodia says it needs to operate as a full-service bank for crypto clients. The Fed denied the application, and Custodia sued. Both a district court and the Tenth Circuit ruled against the bank, and now the Supreme Court is the last stop.
Why the Blockchain Association stepped in
The Blockchain Association's argument isn't just about Custodia. The group contends that if the Fed can deny master accounts to crypto-friendly banks, it can effectively decide which industries get to participate in the banking system at all. That kind of power, the brief argues, goes beyond what Congress intended when it created the master account system.
The trade group frames the case as a check on regulatory overreach. If the Fed can use its discretion over master accounts to freeze out crypto firms, the association says, no digital asset bank is safe — regardless of state charters or compliance records.
What's at stake
The outcome could reshape how crypto banks access the traditional financial system. A Supreme Court ruling in Custodia's favor would likely force the Fed to justify denials more rigorously. A ruling against Custodia would cement the Fed's discretion, leaving crypto banks to rely on partnerships with traditional banks for access to payment rails.
The timing matters. Custodia's case lands as the Fed and other regulators are still figuring out how to treat crypto banks under existing law. The Supreme Court hasn't decided whether to take the case yet, and there's no deadline for that decision.
