Custodia Bank filed a certiorari petition with the Supreme Court on Friday, asking the justices to review the 10th Circuit’s March decision that let stand a Federal Reserve Bank of Kansas City denial of the crypto lender’s master account application. The petition frames the question as whether a regional Reserve Bank president holds “unbounded, unreviewable discretion” to shut disfavored banks out of the Fed’s payment rails, a power Custodia says Congress never delegated.
I’ve watched this fight since Custodia sued the Fed in June 2022. Fed materials put master account processing at 5-7 business days. Custodia waited 19 months, then got rejected in January 2023 over crypto-market volatility and thin risk controls, standard safety-and-soundness boilerplate. The 10th Circuit’s panel decision issued last October, and Judge Timothy Tymkovich’s dissent warned the majority “endorsed a reading of federal law that allows unappointed bank officials to exercise significant yet unreviewable executive authority.” The full court denied rehearing en banc in March, the ruling Custodia now wants the Supreme Court to undo.
Custodia’s timing isn’t an accident. The petition leans hard on Trump v. Cook, the Court’s June 29 ruling that boxed in the President’s power to remove a Fed governor without process. If the Fed’s independence from the White House cuts one way on removal, Custodia argues, it cuts the other way on accountability. Someone still has to answer for what an unelected Reserve Bank president decides. That’s the bet: a Court newly willing to draw lines around Fed authority might draw one here.
The Court is on recess until October. When it reconvenes, the justices will decide whether to grant cert.
Rebecca Lauren