Blockchain Association Backs Custodia's Supreme Court Fight for Fed Master Account

The industry group warns the lower-court ruling is a blueprint for regulators to debank any disfavored industry, no statute required.

Key takeaways

• The Blockchain Association filed an amicus brief on August 13, 2026, urging the Supreme Court to take up Custodia Bank's challenge to the Federal Reserve's master account denial.
• The brief argues existing lower-court rulings hand federal regulators an unlimited, unreviewable template to freeze out any disfavored industry from the payment system.
• The Kansas City Fed must respond to Custodia's petition by September 11, 2026; the Supreme Court has not yet decided whether to grant certiorari.

The Blockchain Association filed an amicus brief on August 13, 2026, in support of Custodia Bank's certiorari petition to the U.S. Supreme Court, first reported by The Block. The filing frames the case as a test of whether "lawful digital asset businesses can compete on equal footing", and whether federal regulators can shut that door without any real statutory constraint.

What's Actually at Stake

A Fed master account is direct access to the Federal Reserve's payment rails: the ability to settle transactions, hold reserves, and move money without routing through a legacy correspondent bank. Without one, a Bitcoin-focused bank like Custodia must depend on incumbent institutions that can revoke access at will. Custodia without a master account is a state-chartered institution that exists at the pleasure of the very banks it was built to compete with.

Custodia, a Wyoming-chartered Special Purpose Depository Institution founded by Caitlin Long, first applied to the Kansas City Fed for a master account in October 2020. The Kansas City Fed sat on the application for over two years before formally denying it in January 2023, citing concerns about the bank's crypto-related business model. Custodia sued, lost at the district court in 2024, and lost again at the 10th Circuit in a 2-1 panel decision on October 31, 2025.

The 10th Circuit denied en banc rehearing 7-3 on March 13, 2026. Custodia filed its certiorari petition with the Supreme Court around July 10, 2026, after Justice Neil Gorsuch granted a 30-day filing extension.

The core legal question is narrow but consequential: the Monetary Control Act states that Fed services "shall be available" to all eligible nonmember depository institutions. Custodia reads "shall" as mandatory. The 10th Circuit read it as leaving regional Fed banks with essentially unreviewable discretion to deny. Custodia's petition argued, as reported by Banking Dive and American Banker, that "Without the Court's intervention here, the Fed's flouting of the statutory constraints on its authority will continue indefinitely."

The Debanking Blueprint

The Blockchain Association's amicus brief sharpens the stakes beyond Custodia itself. The lower-court rulings, the brief warns, provide "a blueprint for federal regulators to debank disfavored industries or companies in the future without interference from state regulators." That is not hyperbole. If the 10th Circuit's reading stands, a regional Fed bank can reject a master account application for any firm it disfavors, and no state charter, no statutory mandate, and no court will stop it.

The Kraken carve-out is worth noting here. In March 2026, the Kansas City Fed granted Kraken Financial a limited-purpose master account, the first granted to any crypto-native firm. The Fed did not say it would never extend access to Bitcoin companies. It said no to Custodia specifically, using the same statute it used to say yes to Kraken.

That selective application is exactly the "unreviewable discretion" Custodia's petition targets. If the statute permits both outcomes, the statute is not the constraint. The regulator's preferences are.

That is the machinery the Blockchain Association is asking the Court to examine. Custodia's petition framed the question as "whether regional Federal Reserve Bank presidents possess unbounded, unreviewable discretion to deny disfavored banks access" to the payment system. The Court taking this case forces that question into the open. The Court declining leaves the answer as: yes, they do.

The CLARITY Act debate on Capitol Hill and this SCOTUS petition are running in parallel, both are tests of whether the regulatory perimeter around Bitcoin-adjacent financial firms gets drawn by statute or by bureaucratic discretion.

What Comes Next

The Kansas City Fed has until September 11, 2026, to file its response to Custodia's petition. After that, the Court will decide whether to grant certiorari. The next 60 to 90 days are the determinative window.

If the Court passes, the 10th Circuit's ruling stands as binding precedent across that circuit, and every future Bitcoin-focused bank seeking a master account does so knowing the regulator faces no real statutory check on denial. If the Court takes the case, it sets up a ruling that could either force the Fed to justify its decisions against a meaningful legal standard or confirm that its discretion is effectively unlimited. Neither outcome is guaranteed. Both matter.

Sources

• Custodia Bank certiorari petition, U.S. Supreme Court (~July 10, 2026), search docket for Custodia Bank v. Federal Reserve Board of Governors on supremecourt.gov
• First reported by The Block