Custodia Bank Appeals Against Denial of Federal Reserve Master Account

By: Isha Das

Crypto-specialist Custodia Bank is appealing against a court ruling upholding the US Federal Reserve’s decision to deny its application for a master account and membership. The Wyoming-based bank filed a notice of appeal on April 26, seeking to overturn a decision that ruled banks are not automatically entitled to such an account simply because they are able to apply.

The master account service gives access to the central bank without the need for intermediary banks, a service Custodia has been seeking to facilitate its crypto services. In a separate filed appeal, the aspiring crypto bank seeks to dispute a bill of costs totaling $25,728.25, sought by one of the defendants, the Federal Reserve Bank of Kansas City.

Not FDIC-insured, Custodia asserted that the Federal Reserve’s delay in dealing with the application and subsequent refusal was both arbitrary and capricious, and thus a violation of the Administrative Procedure Act (APA). APA lays down the law on how federal agencies should create and implement regulations.

Custodia’s bid for the Federal Reserve master account was originally ruled against on March 29, stating that the court had no jurisdiction over the complaint due to the lack of a final decision.