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FollowingCrypto News
On August 13, the Blockchain Association submitted an amicus curiae opinion requesting the U.S. Supreme Court to hear the dispute between Custodia Bank and the Federal Reserve. 
The cryptocurrency industry group argued that federal law requires the Federal Reserve to provide its payment services to eligible state banks. It noted that lower-court rulings gave the central bank unfettered power to exclude legitimate businesses from the U.S. payment system.
The core of the case is a master account, a direct access to the Federal Reserve's payment infrastructure, allowing banks to settle transactions without having to go through intermediaries. Custodia, a Wyoming State Bank that focuses on digital assets, applied for the account in 2020. The Federal Reserve Bank of Kansas City rejected the application in 2023. The 10th Circuit Court of Appeals upheld the refusal and refused to reopen the case in March 2026 by a 7 - 3 vote, making the Supreme Court the only option Custodia had.
The Blockchain Association stated that the 10th Circuit's interpretation gave the Federal Reserve effective veto power on any state bank it chooses to exclude. "Whether federal regulators can, based on their own arbitrariness, violate state privileges and deprive legitimate businesses of banking services is an issue of special importance that will have widespread implications for the national economy," the group wrote in the filing.
Federal Reserve's power over state banks faces test
The association linked the Custodia case to what it calls "Operation Throat 2.0," a term used by critics to describe the pressure exerted by federal regulators under previous administrations to prevent banks from serving the digital asset industry. The submission argued that the Fed's rejection of Custodia's master account application was part of this broader pattern. "The ruling recognizes the Fed's misuse of its payment services to advance the unacceptable policy goal of depriving the digital asset industry of banking services," the group wrote.
The dual banking system-a system in which both state and federal governments can approve banks-is at the heart of this debate. The association said that if the 10th Circuit's ruling is upheld, federal regulators could effectively overturn state-level bank decisions simply by denying access to payment infrastructure. The Supreme Court has not yet agreed to hear the case.
Crypto companies make progress in other areas of the banking industry
Custodia's battle comes against the backdrop of the growing openness of the U.S. banking system to cryptocurrencies. In March 2026, Kraken Financial became the first crypto banking institution to obtain a limited purpose master account from the Federal Reserve Bank of Kansas City, providing direct access to the federal wire transfer system. The approval came from the same regional Federal Reserve bank that rejected Custodia's application three years ago.
In April 2026, Coinbase received conditional approval from the Office of the Comptroller of the Currency (OCC) to establish a national trust company. Circle received OCC final approval for its national trust bank in July 2026. Kraken's parent company Payward applied for a national trust license the following month. The OCC also conditionally approved applications from Ripple, BitGo, Fidelity Digital Assets and Paxos in December 2025.
The Independent Community Bankers Association of America opposed Coinbase's approval in April, arguing that the benefits of cryptocurrency companies seeking banking licenses without being bound by the complete regulatory framework that applies to traditional banks. This resistance has not slowed down the pace of applications. Custodia now requires the Supreme Court to determine whether there are any meaningful limitations on the Fed's power to access payment systems.
