Wyoming-based cryptocurrency bank Custodia has filed a new petition asking for an en banc rehearing in the 10th Circuit Court of Appeals in its long-running legal battle with the Federal Reserve over access to master accounts.
Custodia Bank is asking the court to reconsider an October ruling that sided with the Federal Reserve and denied the bank access to core central bank payment services, in a fight that has become a benchmark for crypto banks’ entry into the U.S. payments system.
In a petition for en banc rehearing filed on Dec. 15, Custodia urged all of the court’s sitting judges, not just the original three-judge panel, to revisit the October decision that upheld the Fed’s authority to deny master accounts to state-chartered, federally regulated banks.
Custodia argued that the three-judge panel’s ruling improperly gave the Fed “unreviewable discretion” in the use of core payments infrastructure, undermined the authority of the nation’s banking industry and raised “serious constitutional questions” by delegating that power to officials who are not appointed as officials of the United States under Article II of the Constitution.
The petition also argued that the panel misread the Currency Control Act, which states that qualified depository institutions “shall have access to” the services of the Federal Reserve. The bank argued that the ruling improperly translated this language into optional discretion, allowing regional Federal Reserve banks to effectively override state bank charters.
The October ruling marks another setback for Custodia, which has been suing to be excluded from the Fed’s payments infrastructure since it first sued the Fed in 2022. Whether the 10th Circuit will agree to rehear the case remains uncertain, but the petition ensures that the debate over cryptocurrency banks’ entry into the financial pipeline is far from over.