Appeals Court Upholds Fed’s Control Over Master Accounts, Rejects Custodia Bank Bid

The Tenth Circuit Court of Appeals has ruled in favor of the Federal Reserve, rejecting Custodia Bank’s bid for direct access to its payment system. The court agreed with the Fed’s authority to control access to master accounts and cautioned against automatic approvals due to potential risks associated with institutions focused on digital assets. This decision comes after Custodia Bank first sought direct access in 2020, a move that was initially denied by the Kansas City Fed branch. The appeals court upheld this decision, reinforcing the Fed’s control over these crucial accounts.