Custodia Bank’s Fed Master Account Appeal Rejected
Custodia Bank, founded by blockchain veteran Caitlin Long in Wyoming, has lost its bid for a Federal Reserve master account. The 10th U.S. Circuit Court of Appeals unanimously upheld a 2023 ruling that denied the application, maintaining that the Fed has broad discretion over master account approvals. Custodia first applied in October 2020 and sued the Fed in 2022 for unlawful delay after the Federal Reserve Bank of Kansas City rejected the request over digital-asset risks. In April 2024, an appeals panel affirmed the Fed master account denial and dismissed Custodia’s claim for automatic access. The bank is weighing a rehearing petition, citing a split among circuit judges. This setback underscores ongoing regulatory scrutiny and hurdles for crypto banking, potentially affecting market confidence. At press time, the total cryptocurrency market cap stood at $3.68 trillion, up 2.65%.
Neutral
While Custodia Bank’s appeal loss highlights regulatory challenges for crypto banking, it does not directly impact any specific cryptocurrency’s protocol or supply. In the short term, the decision may temper enthusiasm around regulated banking solutions for digital assets, introducing caution among institutional players. However, long-term market dynamics are more likely driven by broader regulatory clarity and demand for integrated banking services. As such, the ruling is unlikely to trigger significant price movements for major cryptocurrencies, making the overall impact neutral.