The Federal Reserve recently granted Kraken a restricted master account, a development that arrives just days after Custodia’s lengthy battle with the Fed concluded in defeat. The U.S. Court of Appeals for the Tenth Circuit denied Custodia’s final appeal by a 7-3 vote, closing one chapter in this high-profile dispute. The decision comes as the Fed simultaneously signals openness to new paths for master accounts through ongoing policy work on so-called skinny master accounts for crypto firms. Meanwhile, the Kansas City Fed Reserve Bank has received authorization to proceed in its regulatory role, and the national Fed Board is actively drafting procedures to welcome crypto companies and other entities into the slender master-account framework.
Those procedures are still in their early stages, and it remains unclear when crypto banks may begin applying. Custodia did not respond to requests for comment on Friday’s ruling. An insider familiar with the institution’s efforts said the bank continues pursuing access to a master account. A dissents’ opinion suggested that a rehearing should have been permitted, underscoring ongoing debates about regulatory balance between state and federal authorities.
Timothy Timkovich said, “The impact of this case on the financial industry and the balance between state and federal authorities in banking regulation is very important.” Kraken’s success has prompted analysts to reassess predictions for other crypto names.
Although included on the list of companies with master accounts, some insiders who have watched the years-long fight say progress will be slow and will vary by the Fed region where the company is located. Custodia filed a petition for rehearing by all appellate judges.
The Federal Reserve recently granted Kraken a restricted master account, a development that arrives just days after Custodia’s lengthy battle with the Fed concluded in defeat. The U.S. Court of Appeals for the Tenth Circuit denied Custodia’s final appeal by a 7-3 vote, closing one chapter in this high-profile dispute. The decision comes as the Fed simultaneously signals openness to new paths for master accounts through ongoing policy work on so-called skinny master accounts for crypto firms. Meanwhile, the Kansas City Fed Reserve Bank has received authorization to proceed in its regulatory role, and the national Fed Board is actively drafting procedures to welcome crypto companies and other entities into the slender master-account framework.
Those procedures are still in their early stages, and it remains unclear when crypto banks may begin applying. Custodia did not respond to requests for comment on Friday’s ruling. An insider familiar with the institution’s efforts said the bank continues pursuing access to a master account. A dissents’ opinion suggested that a rehearing should have been permitted, underscoring ongoing debates about regulatory balance between state and federal authorities. The outcome has prompted analysts to reassess expectations for other crypto names with potential master-account access, though the list of firms remains fluid and varies by Fed region. Custodia filed a petition for rehearing by all appellate judges.
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