Wyoming Crypto Bank Files Petition for Full Court Review of Fed Account Blocking
Crypto journalist
Anas Hasan
Crypto journalist
Anas Hasan
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Wyoming-chartered crypto bank Custodia has appealed to the entire Tenth Circuit Court of Appeals, escalating a five-year legal battle over the Federal Reserve's rejection of its master account.
The bank argues that the October panel's decision misinterpreted federal law and raises constitutional concerns about federal authority.
The petition, filed Dec. 15, asks all active circuit judges to examine whether state Federal Reserve banks can legally obtain a non-reviewable ruling for qualified institutions through master accounts.
Custodia's three-judge panel's 2-1 ruling conflicts with the Financial Conduct Authority's mandate to provide payment services to nonmember depository institutions, which creates unconstitutional veto power over state bank charters.
The file raises federalism concerns.
Without access to a master account, the bank cannot use core Federal Reserve payment services, including wire transfers and automatic clearinghouses, rendering its state-issued charter meaningless even if it meets all legal eligibility requirements.
“When it denies the Fed's main account to a state-chartered financial institution, it effectively denies the bank charter approved by state regulators,” the petition states.
Wyoming created the SPDI framework to attract digital asset companies, which requires 100% reserve backing and prohibits loans to reduce risk.
Custodia argues that the federation's rejection of this carefully crafted government regulatory system is designed to foster blockchain innovation within strict security measures.
Its constitutional implications go beyond federalism.
Cstodia Law Group states that if regional Reserve Bank presidents retain unreviewable discretion over master accounts, they effectively become “officers of the United States” with significant executive power without undue constitutional designation.
Federal Reserve Bank presidents are elected by private bank directors and approved by the board of directors, a process that is custodial if officials who violate the appointment clause exercise discretionary powers confirmed by majority opinion.
A deep court division emerges
The petition reflects growing disagreement among Tenth Circuit judges over the interpretation of the statute.
Judge Timothy Tymkovich's dissent joins Judge Bacharach's 2017 opinion in Fourth Corner Credit Union v. Federal Reserve Bank of Kansas City, which created a 2-2 split among circuit judges on whether the Financial Conduct Act mandates access to a master account.
Tymkovich wrote that the federal interpretation would give “unreviewable discretion” under Article II that raises “vexatious questions” that contradict the plain language of the MCA, which requires services to be “available to nonmember depository institutions.”
The Kansas City Fed rejected Custodia's application in January 2023 after a 27-month review, citing concerns from “crypto-asset activities” even though it initially told the bank it had “no showrunners” with its application.
Internal Fed documents said staff considered Custodia's capital “adequate” and praised its “fantastic” executive team, only for Board of Governors officials to intervene.
Federal Reserve Governor Christopher Waller has since publicly acknowledged that the Fed has enough tools to manage risks without completely reneging on major accounts.
In an October interview, Waller suggested the Fed could “tailor” account structures to match individual bank risk profiles, undermining the debate over the importance of blanket denials.
OCC exposes systematic crypto debanking
Custodia's legal battle unfolds as federal regulators confront widespread debanking practices targeting crypto companies.
The Office of the Comptroller of the Currency released findings in December that found all nine major national banks imposed “inappropriate” restrictions on legitimate businesses, including digital asset companies, between 2020 and 2023.
JPMorgan Chase, Bank of America, Citibank, Wells Fargo, and others have maintained internal policies that require enhanced approvals or impose tighter restrictions on areas deemed to conflict with institutional values.
The review examined thousands of complaints about political and religious debanking, as well as crypto exclusions.
Banks insist they don't discriminate, but the OCC found many restrictive policies are publicly visible.
In fact, Strike CEO Jack Mallers recently said the accounts were abruptly shut down with vague references to “activism,” fueling accusations of coordinated exclusion despite regulatory denials.
The controversy escalated after President Trump signed an executive order in August intended to prevent banks from charging customers solely for crypto-related transactions.
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