According to Odaily, digital asset bank Custodia Bank has filed a court brief with the 10th U.S. Circuit Court of Appeals, challenging a Wyoming judge's decision to give the Federal Reserve unrestricted power to deny its key account. Custodia is asking the Court of Appeals to instruct the Wyoming District Court to reverse its decision to deny Custodia's request for a master account and to grant her a master account. Caitlin Long, CEO of Custodia, has appointed two top lawyers to the Supreme Court to defend her company.

Custodia’s lawyers say the Fed’s power to deny a master account to state-chartered banks undermines the dual banking system, which allows banks to freely choose between operating under a state or federal charter. They also allege that the Fed’s power to discriminate against state-chartered banks seeking a master account could violate the Monetary Control Act, which allows state-chartered banks seeking Fed 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...shall be open to nonmember depository institutions," to make clear that Congress intended all eligible banks to have equal access to Federal Reserve services.

In early May, Custodia hoped to operate as an uninsured bank, issuing a stablecoin backed by cash and other assets. However, the Fed ruled that the bank was not eligible for a primary account in the Federal Reserve System and rejected its application to join the Federal Reserve System, suggesting that the Fed intends to isolate the payment path for crypto assets. Notably, a Federal Reserve account allows its holder to transfer reserves directly to another financial institution without another intermediary.