# Tenth Circuit affirms Federal Reserve discretion to deny Custodia a master account

> A divided Tenth Circuit affirmed judgment against crypto-focused Custodia Bank, holding that federal law did not impose a nondiscretionary duty requiring the Kansas City Fed to provide a master account and that the Board’s denial did not supply the relief Custodia sought.

- URL: https://riadefi.com/regulation/2025-10-31-custodia-master-account-tenth-circuit/
- Posture: Court decision
- Authorities: United States Court of Appeals for the Tenth Circuit
- Event date: 2025-10-31
- Effective: 2025-10-31
- Version: 1, published 2026-08-07 (first published 2026-08-07)
- Advisor-relevant: yes

## What changed

A divided Tenth Circuit affirmed judgment against crypto-focused Custodia Bank, holding that federal law did not impose a nondiscretionary duty requiring the Kansas City Fed to provide a master account and that the Board’s denial did not supply the relief Custodia sought. The decision leaves regional Reserve Banks substantial gatekeeping discretion over direct payment-system access.

## Who it affects

- State-chartered banks seeking Federal Reserve master accounts
- Crypto custodians and banks dependent on payment-system access
- Advisers diligencing banking and settlement partners

## What is still open

- Whether Supreme Court review or legislation will alter master-account access standards
- How Reserve Banks will apply risk-based discretion to other novel-charter applicants

## What it means for an advisor

- Treat direct Federal Reserve access as a discretionary counterparty dependency, not an entitlement; diligence fallback correspondent banking, liquidity, settlement and concentration risks for digital-asset providers.

## Sources

1. [Tenth Circuit affirms Federal Reserve discretion to deny Custodia a master account](https://www.govinfo.gov/content/pkg/USCOURTS-ca10-24-08024/pdf/USCOURTS-ca10-24-08024-0.pdf) · United States Court of Appeals for the Tenth Circuit · 2025-10-31 · effective 2025-10-31


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Published by Ketju Research on RIADeFi (https://riadefi.com). Educational research for financial professionals; not investment, legal, tax, or compliance advice.