# Custodia Bank seeks Supreme Court review of Fed master‑account denial

**Published:** 2026-05-29T22:51:44.000Z  
**Topic:** Banking  
**Sentiment:** neutral  
**Publisher:** TrendWatcher — https://www.trendwatcher.in/article/6700722b-a865-4bfb-a6b8-8b271eec565e

Custodia Bank asks the Supreme Court for more time to file a certiorari petition challenging the Federal Reserve’s refusal of a master account, highlighting a

Custodia Bank, a Wyoming‑chartered digital‑asset bank, has filed a petition for a 30‑day extension to submit a certiorari petition to the U.S. Supreme Court, seeking review of a lower‑court ruling that the Federal Reserve can deny its master account application [1].

**Key takeaways**  
- Custodia requested an extension until July 10, 2026 to file its petition, citing case complexity and other deadlines [1].  
- The Supreme Court’s Justice Neil Gorsuch granted the extension, moving the deadline to July 11, 2026 [2].  
- The Tenth Circuit affirmed that Reserve Banks have discretionary authority to reject master‑account requests from eligible non‑member banks [1][3].  
- A dissenting minority on the Tenth Circuit warned that such discretion may conflict with statutory and constitutional requirements [2].  
- Kraken recently received a limited “skinny” master account, showing a narrow pathway for crypto firms into Fed payment rails [1].

## Legal battle reaches the Supreme Court  

Custodia first applied for a Federal Reserve master account in October 2020, shortly after obtaining a special‑purpose depository institution charter in Wyoming. The Federal Reserve rejected the request in January 2023, citing safety concerns tied to Custodia’s crypto‑focused business model [2]. After losing in district court in 2024, Custodia appealed; a three‑judge panel of the Tenth Circuit upheld the lower‑court decision on October 31, 2025, and the full circuit denied an en banc rehearing on March 13, 2026 by a 7‑3 vote [1][3]. The dissent, authored by Judge Timothy Tymkovich, argued that the panel’s interpretation misread the Monetary Control Act’s mandate that master accounts be available to eligible non‑member banks [2].

Following the en banc denial, Custodia filed a petition for a 30‑day extension with Justice Neil Gorsuch, who granted the request on May 29, 2026, extending the filing deadline from June 11 to July 11, 2026 [2]. Custodia’s counsel, Kannon K. Shanmugam of Davis Polk, noted the need for additional preparation time given the case’s complexity and other pending matters [2].

## Implications for crypto banking and the payment system  

The dispute centers on whether state‑chartered crypto banks like Custodia must be granted access to the Federal Reserve’s payment rails, a service that allows direct settlement of transactions. Without a master account, banks must rely on intermediary institutions, creating operational and cost disadvantages. A Supreme Court ruling in Custodia’s favor could limit the Fed’s discretion and potentially open the payment system to more crypto‑focused banks nationwide. Conversely, the Fed’s position, supported by the Tenth Circuit, emphasizes the need for discretion to protect the safety and integrity of the nation’s payment infrastructure.

The recent granting of a limited master account to Kraken—a crypto exchange—demonstrates the Fed’s willingness to experiment with narrower access models, though it falls short of full Tier 3 master‑account status [1]. The outcome of Custodia’s petition will signal whether broader access will be permitted or whether the Fed will retain broad discretion to deny such applications.

## Why it matters  

The case tests the balance between innovative crypto banking and traditional financial stability safeguards. A Supreme Court review could reshape the regulatory landscape for state‑chartered digital‑asset banks, influencing how they interact with the nation’s core payment system. The deadline for filing the petition is now July 11, 2026; the Court’s decision on whether to hear the case will determine the next legal battleground and could set precedent for future crypto‑banking access to Federal Reserve services.

## Sources
1. Crypto Briefing — [Custodia Bank seeks more time to challenge Fed master account denial at Supreme Court](https://cryptobriefing.com/custodia-bank-supreme-court-fed-master-account/)
2. Cryptotimes — [Custodia Bank Takes Crypto Banking Fight Against Fed to Supreme Court](https://www.cryptotimes.io/2026/05/30/custodia-bank-takes-crypto-banking-fight-against-fed-to-supreme-court/)
3. Bankingjournal — [Tenth Circuit denies rehearing en banc in Custodia Bank’s lawsuit over master accounts | ABA Banking Journal](https://bankingjournal.aba.com/2026/04/tenth-circuit-denies-rehearing-en-banc-in-custodia-banks-lawsuit-over-master-accounts/)

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Cite as: TrendWatcher, "Custodia Bank seeks Supreme Court review of Fed master‑account denial", https://www.trendwatcher.in/article/6700722b-a865-4bfb-a6b8-8b271eec565e