Custodia's Six-Year Fed Fight Reaches the Supreme Court With Industry Backing

Blockchain Association files brief backing Custodia's petition

The Blockchain Association filed an amicus brief with the United States Supreme Court on 12 August 2026, supporting Custodia Bank against the Federal Reserve. The industry group backs Custodia's petition, filed in July 2026, which asks the justices to decide whether regional Federal Reserve banks hold unchecked discretion to deny account access to eligible state-chartered banks. A master account gives a bank direct access to the Federal Reserve's payment systems, without relying on another bank as an intermediary. The brief adds industry weight to a case that began as one bank's dispute.

Custodia has fought the Fed since 2020

Custodia Bank, a Wyoming-chartered digital-asset bank founded by Wall Street veteran Caitlin Long, first applied for a master account in October 2020. The Kansas City Fed denied the application in January 2023, after a review that ran about 19 months, citing risks tied to Custodia's crypto-focused business model. Custodia sued the Kansas City Fed in June 2022 over the delay. It then lost at the district court and at the Tenth Circuit Court of Appeals. In March 2026, the appeals court denied a rehearing by a 7-3 vote.

The brief warns of a debanking blueprint

The Blockchain Association argued that the lower-court rulings hand regulators unchecked power over which firms reach the banking system. Custodia contends that the Federal Reserve Act and the Monetary Control Act require the Fed to provide services to eligible institutions. The Tenth Circuit instead held that the statutes give Federal Reserve banks discretion to approve or deny applications. The group said the decisions create "a blueprint for federal regulators to debank disfavored industries or companies in the future without interference from state regulators." The brief urges the Court to grant review.

"No lawful industry should be excluded from essential banking services through regulatory pressure or unchecked administrative discretion", 12 August 2026. — Blockchain Association, amicus brief

Kraken already holds a limited master account

The same Kansas City Fed granted Kraken Financial a limited-purpose master account in March 2026. Kraken became the first crypto-native firm to receive such access. Its account carries restrictions and excludes some Federal Reserve services, including interest on reserves. The difference highlights Custodia's claim that access decisions rest on case-by-case judgment rather than clear rules.

Bitcoin trades below $64,000 as the case advances

Bitcoin traded at $63,554 at the time of publication, down 0.1% over the past 24 hours, versus the previous close (CoinPaprika, 13 August 2026). Its market value stood near $1.28 trillion, and it sits about 50% below its October 2025 record high (CoinPaprika, 13 August 2026). The case tests how far crypto firms can reach regulated banking rails.

The Kansas City Fed must respond by September

The Kansas City Fed must file its response to Custodia's petition by 11 September 2026. The Supreme Court is then expected to decide later in 2026 whether to hear the case. The outcome could affect other state-chartered crypto firms that want direct access to the Federal Reserve.