# Blockchain Association warns Fed could squeeze crypto firms with

**Published:** 2026-08-16T17:37:31.501Z  
**Topic:** Banking  
**Sentiment:** neutral  
**Publisher:** TrendWatcher — https://www.trendwatcher.in/article/7447b8a8-2ea1-4dd7-8e01-abc5a276c633

Blockchain Association files amicus brief urging Supreme Court review of Fed master account denial, warning the central bank could restrict banking access to

The Blockchain Association filed an amicus brief on Wednesday urging the U.S. Supreme Court to review Custodia Bank’s challenge to the Federal Reserve’s denial of a “master account,” warning that the Fed’s broad discretion could be used to restrict banking access for crypto‑related firms [4].

| At a glance | |
|---|---|
| Amicus brief filed | Wednesday (date not specified) |
| Custodia master‑account denial | 2023 by Fed Bank of Kansas City |
| Lower‑court ruling | 7‑3 against rehearing in March |
| Other crypto firms with Fed access | Kraken (limited‑purpose Fedwire account) |

## Legal backdrop
Custodia, a Wyoming‑chartered crypto bank, applied for a Fed master account in 2020 to settle payments directly with the central bank. The Federal Reserve Bank of Kansas City rejected the request in 2023, and the Tenth Circuit upheld the Fed’s discretion to deny the account, voting 7‑3 against rehearing the case in March [3]. The Blockchain Association argues that federal law obliges the Fed to provide payment services to eligible non‑member banks and that the denial represents an “impermissible policy goal—debanking the digital‑asset industry” [4].

## Industry context
While Custodia’s petition remains pending, several crypto‑related firms have secured varying levels of U.S. banking access. Kraken Financial received a limited‑purpose Fedwire master account in March [2], and Coinbase, Circle, Ripple, BitGo, Fidelity Digital Assets and Paxos have obtained OCC‑approved national trust charters or conditional approvals [2]. Traditional banking groups, such as the Independent Community Bankers of America, have opposed these moves, arguing that crypto firms seek banking privileges without bearing the full regulatory burden applied to conventional banks [2].

## Potential implications
The Association’s brief frames the dispute as the latest phase of what it calls “Operation Choke Point 2.0,” alleging that regulators use discretionary power to pressure banks away from serving digital‑asset clients [4]. If the Supreme Court were to limit the Fed’s ability to deny master accounts, state‑chartered crypto banks could gain direct access to Fed payment rails, reducing reliance on intermediary banks and potentially reshaping the dual banking system [4].

## What to watch
- Supreme Court decision on Custodia’s petition (date to be announced).  
- Any further filings by the Blockchain Association or other crypto groups challenging Fed discretion.  
- Regulatory updates from the Office of the Comptroller of the Currency regarding national trust charters for crypto firms.

The outcome will clarify how much control the Federal Reserve retains over payment‑system access for state‑chartered banks, a question that could affect the broader digital‑asset industry’s ability to operate within the traditional banking framework.

## Sources
1. Blockchain — [Crypto Group: Fed Banking Access Warning Issued | Flash News Detail | Blockchain.News](https://blockchain.news/flashnews/crypto-group-fed-banking-access-warning-issued)
2. CoinTelegraph — [Crypto group backs Custodia in Supreme Court battle over Fed access](https://cointelegraph.com/news/blockchain-association-backs-custodia-in-supreme-court-fight-over-fed-master-account)
3. Crypto Briefing — [Crypto group backs Custodia in Supreme Court fight over Fed access](https://cryptobriefing.com/blockchain-association-custodia-supreme-court-fed/)
4. Decrypt — [Crypto Group Warns Fed Could Use Banking Access to Squeeze Digital Asset Firms](https://decrypt.co/375567/crypto-group-fed-banking-access-squeeze-firms)
5. Cryptobreaking — [Crypto Group Supports Custodia in Supreme Court Fight for Fed Access](https://www.cryptobreaking.com/crypto-group-supports-custodia-in-2/)

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Cite as: TrendWatcher, "Blockchain Association warns Fed could squeeze crypto firms with", https://www.trendwatcher.in/article/7447b8a8-2ea1-4dd7-8e01-abc5a276c633