U.S Court Rejects Custodia Bank’s Bid for Master Account

• Custodia Bank insists it is not giving up and is looking at every option.
• The attempt by Custodia to get a master account from the Federal Reserve was rejected.

Custodia Bank, a digital asset bank, had its request for a declaratory judgment denied by the U.S District Court for the District of Wyoming, which also rejected the bank’s request for a master account with the U.S Federal Reserve. But Custodia insists it is not giving up and is looking at every option.

The attempt by Custodia to get a master account from the Federal Reserve was rejected by Judge Scott Skavdahl in a document dated March 29. This account, which is commonly referred to as “a bank account for banks,” allows financial organizations to use the payment systems of the Federal Reserve.

Forced to Rely on Intermediate Bank

According to Custodia, the bank would be at a disadvantage compared to other financial institutions if it did not have a master account to hold crypto-assets. They said that Custodia is treated like a second-class citizen and forced to rely on and be committed to an intermediate bank since it cannot function without a master account.

In addition, Skavdahl ruled that Custodia does not have the right to have the judgment of the Federal Reserve Bank of Kansas City (FRBKC) reversed. The court must accept FRBKC’s motion for summary judgment on Claim II and reject Custodia’s writ of mandamus, which would require FRBKC to provide its master account.

In October 2020, Custodia applied for a master account with the Federal Reserve. In 2023, the Fedwire network handled more than 193 million transactions; if approved, the bank would be able to use this network.

The Federal Reserve denied Custodia’s request to join in January 2023, saying the company’s crypto activities were “inconsistent with the required factors under the law.”

Highlighted Crypto News Today:

Empower Oversight and U.S SEC Reach Settlement in Ongoing Lawsuit