According to Odaily, digital asset bank Custodia Bank has submitted a court summary to the Tenth Circuit Court of Appeals in the United States, challenging the decision of a Wyoming judge to grant the Federal Reserve unrestricted power to reject its master account. Custodia is asking the appellate court to instruct the Wyoming District Court to revoke its decision to reject Custodia's application for a master account and grant it a master account. Caitlin Long, CEO of Custodia, has hired two senior Supreme Court lawyers to defend her company.
The lawyers for Custodia argue that the Federal Reserve's power to refuse to open a master account for state-chartered banks undermines the dual banking system, which allows banks to freely choose whether to operate under state or federal charter. They also claim that the Federal Reserve's power to discriminate against state-chartered banks seeking to obtain a master account may violate the Monetary Control Act, which allows state-chartered banks seeking to obtain Federal Reserve services to have fair access.
They emphasized the word 'shall' used by Congress in the Monetary Control Act and wrote that 'all services of all Federal Reserve Banks... should be open to non-member deposit institutions', to illustrate that Congress intended all eligible banks to have equal access to the services of the Federal Reserve.
In early May, Custodia hoped to operate as an uninsured bank, issuing a stablecoin backed by cash and other assets. However, the Federal Reserve determined that the bank was not entitled to a master account in the Federal Reserve System and rejected its application to join the Federal Reserve System, indicating that the Federal Reserve intends to isolate the payment track from crypto assets. It is reported that a Federal Reserve account allows the holder to transfer reserves directly to another financial institution without another intermediary.