Fed Crushes Caitlin Long’s Crypto Bank’s 5-Year Bid for Master Account

A ￰4￱ court has ruled against Custodia Bank, the Wyoming-based crypto-focused institution founded by former Morgan Stanley executive Caitlin Long, in its long-running battle to gain direct access to the Federal Reserve’s payment ￰5￱ a decision filed Friday, the ￰6￱ of Appeals for the Tenth Circuit affirmed an earlier ruling from the District of Wyoming that sided with the Federal Reserve Board of Governors and the Federal Reserve Bank of Kansas City.) charter from the state of ￰7￱ application, typically processed within a week, languished for over 19 months without ￰8￱ January 2023, the Federal Reserve Bank of Kansas City formally rejected the request, citing “safety and soundness” concerns tied to the bank’s focus on digital ￰9￱ asset-focused bank Custodia has filed a lawsuit against the FED Board of Governors and the Federal Reserve Bank of Kansas City over “unlawfully” delaying its application for a master account with the ￰10￱ more ￰0￱ — ￰11￱ (@cryptonews) September 23, 2022 The Fed argued that Custodia’s business model relied too heavily on volatile crypto markets and lacked sufficient controls to manage illicit finance ￰12￱ also pointed to the bank’s limited experience in traditional risk management and the potential systemic implications of granting direct access to a crypto-centered ￰13￱ sued the Federal Reserve in June 2022 , claiming an “unlawful delay” and arguing that eligible institutions are entitled to a master account under federal ￰14￱ the Wyoming court ruled in favor of the Fed in March 2024 , Custodia appealed, asserting that the decision gave the central bank excessive discretion over market ￰15￱ Rules Against Digital Asset Bank Custodia’s Bid for Federal Reserve Master Account Custodia Bank has been denied a ￰16￱ Reserve master account by the United States District Court for the District of Wyoming. #CryptoNews ￰1￱ — ￰17￱ (@cryptonews) March 31, 2024 Friday’s ruling reaffirmed the lower court’s position, dealing another blow to Long’s push to integrate crypto banking into the ￰18￱ ￰19￱ a statement posted to X following the judgment, Custodia said it was “actively considering” petitioning for a ￰20￱ of @custodiabank : ￰21￱ — Custodia Bank (@custodiabank) October 31, 2025 “While we were hoping for a win at the Tenth Circuit today, we received the next big thing — a strong dissent,” the company wrote, referring to a partial dissent that raised constitutional questions about the Federal Reserve’s ￰22￱ Won’t the Fed Grant Crypto Firms a Master Account?

A Federal Reserve master account would have allowed Custodia to connect directly to core ￰23￱ systems such as Fedwire and the Automated Clearing House (ACH). Such access enables banks to settle transactions, hold reserves, and participate directly in monetary policy operations, benefits currently limited to regulated depository institutions. Crypto-focused firms have long sought similar access to improve efficiency and reduce reliance on intermediary banks. However, the Federal Reserve has not approved any master account applications from crypto-native institutions to ￰24￱ central bank has repeatedly cited the sector’s high volatility, potential for fraud, and insufficient consumer protection as reasons for caution.) March 2, 2025 Long has accused the Fed of double standards , arguing that large traditional banks receive preferential treatment while smaller innovators face “debanking.” In April, Long criticized the Federal Reserve for maintaining restrictions that prevent banks from directly holding crypto or issuing stablecoins on public blockchains like ￰25￱ Long claims the US Federal Reserve masked its anti-crypto stance with fake rule relaxations while protecting big-bank stablecoins and blocking real crypto progress. #Caitlin Long #USFed . ￰2￱ — ￰26￱ (@cryptonews) April 28, 2025 She argued that the Fed continues to favor private blockchain systems controlled by major banks, creating a competitive ￰27￱ this year, Custodia announced it had launched “Avit,” a tokenized ￰28￱ stablecoin issued jointly with Vantage Bank on Ethereum . @custodiabank and @Vantage_Bank have announced the launch of the first-ever U.

S. bank-issued stablecoin deployed on blockchain. #Custodia #Stablecoin ￰3￱ — ￰29￱ (@cryptonews) March 26, 2025 The project, backed by on-demand deposits held within the banking system, was described as the first U. S. bank-issued stablecoin deployed on a public ￰30￱ said the initiative proved that banks could “tokenize demand deposits on a permissionless blockchain in a regulatorily compliant manner.” Despite such efforts, federal regulators have maintained a cautious ￰31￱ in March, Long said that under the current administration, no meaningful changes have been made to rules labeling digital asset exposure as “unsafe and unsound” for banks.