Custodia, a crypto bank located in Wyoming, has submitted a new petition as part of its ongoing legal dispute with the Federal Reserve, seeking a rehearing en banc from the entire Tenth Circuit Court of Appeals regarding its request for a master account.
The bank is appealing the court’s October decision, which favored the Fed by denying access to essential central bank payment services, a case that is becoming pivotal for crypto banking’s entry into the U.S. payments network.
In its en banc rehearing petition filed on December 15, Custodia calls on all active judges of the court, rather than just the original three-judge panel, to revisit the October ruling, which upheld the Fed’s authority to deny master accounts even to state-chartered banks under federal supervision.
Custodia contends that the three-judge panel’s decision improperly grants the Fed “unreviewable discretion” over access to crucial payment systems, which undermines state banking authority and raises “serious constitutional concerns” by allowing unelected officials, not appointed as U.S. officers under Article II of the Constitution, to hold that power.
The petition further asserts that the panel misinterpreted the Monetary Control Act, which declares that Federal Reserve services “shall be available” to qualifying depository institutions. Custodia argues that the ruling wrongly transforms this language into discretionary power, enabling regional Federal Reserve banks to effectively circumvent state banking charters.
This October ruling represents yet another hurdle for Custodia, which has appealed its exclusion from the Fed’s payment infrastructure since it initiated legal action against the Federal Reserve in 2022. While it’s uncertain whether the full Tenth Circuit will agree to review the case, the petition ensures that the discussion surrounding crypto banks’ access to financial systems continues unabated.
