The US court sided with the Fed in the Custodia Bank case, denying the appeal for review

A U.S. District Court has ruled that a custodian bank cannot provide a Federal Reserve master account and denied Digital Asset Bank's motion for summary judgment. However, Custodia says it is not backing down and is exploring all possible avenues.

“We are evaluating all our options, including the court's decision and an appeal,” a Custodia Bank spokesperson told Cointelegraph.

In a March 29 filing in the U.S. District Court for the District of Wyoming, Judge Scott Skavdahl rejected Custodia's bid to access the Federal Reserve's main account. The account, often referred to as a “bank account,” facilitates financial institutions' access to the Federal Reserve's payment systems.

Custodia puts the bank at a disadvantage by stating that without a master account, it cannot provide the same protection for crypto-assets as other banking institutions.

“Without a master account, if Custodia can function at all, it is a second-class citizen, relegated to an asylum and a middle bank,” he argued.

In addition, Skavdahl declared that Custodia had no right to overturn the decision of the Federal Reserve Bank of Kansas City:

“Cstodia is not entitled to a writ of mandamus requiring FRBKC to issue its principal account, and summary judgment must be granted in favor of FRBKC on Claim II.”

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Custodia filed an application for a Federal Reserve Master Account in October 2020. If the application is approved, it will allow the bank to access the Fedwire network, which handled more than 193 million transactions last year.

In the year In January 2023, the federation rejected Custodia's membership application, citing its involvement in the crypto space as “not compatible with the necessary conditions set by law”.

Custodia was one of Wyoming's first Special Purpose Depository Institutions (SPDIs), also known as “blockchain banks.” SPDIs were established to help businesses that are unable to access the Federal Deposit Insurance Corporation's banking services due to their relationship with crypto.

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