Custodia Bank’s Supreme Court petition, docketed as No. 26-62 on 14 July 2026, puts a single statutory question to the justices: does the word ‘shall’ in the Monetary Control Act actually obligate the Federal Reserve to provide payment services to eligible nonmember depository institutions, or can regional Fed presidents simply decline?
The Blockchain Association filed an amicus brief on 12 August 2026 arguing the Tenth Circuit’s reading of Fed discretion is too broad. The Digital Chamber filed its own amicus brief the following day, on 13 August 2026, lending additional industry weight to the petition.
The Statutory Argument at the Centre of Custodia Bank’s Supreme Court Case
Custodia holds a Wyoming Special Purpose Depository Institution (SPDI) charter and applied for a Fed master account in 2020, seeking direct access to Fedwire without routing through a correspondent bank. On 27 January 2023, the Federal Reserve Bank of Kansas City denied the master account application, and the Board of Governors simultaneously denied Custodia’s Federal Reserve membership application on the same date.
A 2-1 Tenth Circuit panel upheld both denials on 31 October 2025, ruling that statutory eligibility for a master account does not create an entitlement to one. The court concluded regional Fed banks retain broad discretion to deny access even to institutions that meet the eligibility threshold. Rehearing was denied 7-3 on 13 March 2026.
The Blockchain Association’s brief frames the outcome bluntly. It states the Tenth Circuit decision ‘ratifies the Fed’s misuse of its payment services to further an impermissible policy goal: debanking the digital asset industry,’ per PYMNTS. The brief connects the Kansas City Fed’s 2023 rejection to the broader ‘Operation Choke Point 2.0’ narrative, where federal regulators allegedly discouraged banks from servicing digital asset firms.
Per the SCOTUSblog case page, the formal question presented is whether the Monetary Control Act’s ‘shall’ language strips regional Fed presidents of discretionary authority to deny master accounts to legally eligible institutions. Justice Gorsuch had already granted Custodia an extension to file its certiorari petition, pushing the deadline from 11 June 2026 to 11 July 2026.
Kraken Got In; Custodia Did Not, and That Contrast Now Has Political Traction
The irony is that the same Kansas City Fed that rejected Custodia in 2023 approved a limited-purpose master account for Kraken Financial (the Wyoming-chartered entity Payward Financial) in March 2026. The approval comes with constraints: Kraken’s account carries a one-year initial term, earns no interest on reserves held at the Fed, and the Kansas City Fed classified the entity as a ‘Tier 3’ institution, according to Cointelegraph.
That structure maps closely onto what Fed Governor Christopher Waller described in October 2025 as a ‘skinny’ master account: a tailored access model calibrated to the risk profile of the individual firm rather than full payment-system membership.
The Kraken approval has already drawn Congressional scrutiny. Rep. Maxine Waters (D-CA), ranking Democrat on the House Financial Services Committee, formally demanded the Kansas City Fed explain the legal basis for the arrangement, noting that neither the Federal Reserve Act nor the Fed’s own 2022 Account Access Guidelines contain the ‘limited purpose account’ designation, according to CoinSpeaker.
The divergent treatment of two Wyoming-chartered crypto banks by the same regional Fed bank gives Custodia’s legal team a live comparison to work with. The Tenth Circuit’s October 2025 ruling said eligibility confers no entitlement; Kraken’s approval without a published legal framework suggests the Fed is making access decisions on criteria that have not been formally disclosed or codified.
Whether the Supreme Court grants certiorari will determine whether the ‘shall’ in the Monetary Control Act gets teeth. If it declines, the Tenth Circuit’s broad-discretion reading stands as binding precedent across the circuit, and every state-chartered crypto bank seeking direct Fed access faces the same wall Custodia hit in 2023.
