Blockchain Association Submits Amicus Brief Supporting Wyoming Charter Bank Custodia's Supreme Court Petition
The Blockchain Association has submitted an amicus brief to the U.S. Supreme Court in support of Wyoming charter bank Custodia Bank's petition for a writ of certiorari, seeking to review whether the regional Federal Reserve Bank has the authority to deny eligible state-chartered banks access to master accounts.
The brief points out that the Tenth Circuit Court of Appeals previously upheld the Federal Reserve's ruling, granting the central bank broad discretion to de-bank disfavored industries or companies, effectively vetoing which state-chartered banks can operate normally. The association represents over 130 digital asset and blockchain companies, emphasizing that master accounts are the infrastructure through which institutions settle payments directly with the Federal Reserve; their absence will increase costs, elevate risks, and weaken the ability to serve customers.
Custodia, as a special purpose depository institution in Wyoming, applied for a master account with the Kansas City Federal Reserve Bank in 2020 but was denied in 2023 due to its cryptocurrency business model. The association's brief details how federal regulators have previously pressured regulated banks to de-bank the digital asset industry and warns that the current ruling will further entrench this path, undermining the long-standing dual banking system.
The Kansas City Federal Reserve Bank has been granted an extension until September 11 to respond to the petition, which was originally due on August 13. Custodia's petition is represented by Davis Polk law firm, while the association's brief is submitted by the Gibson Dunn team, continuing its similar stance in lower courts for 2024 and beyond.
Paragraphs 1 to 5 focus on the actions of the event's main subjects and specific numerical timelines, with the association clearly stating that the absence of master accounts directly leads to banks being unable to access the national payment system equally.
From a market mechanism perspective, the event-driven flow of funds and resources is clear: capital and legal resources supporting state-chartered innovative banks are concentrating towards the Supreme Court, benefiting digital asset-related institutions seeking direct payment channels, while traditional intermediary banks and the Federal Reserve system, which attempts to filter business models through discretion, are under pressure. If discretion is confirmed, funds will further tilt towards large institutions that have obtained master accounts, putting state-level innovative banks under higher operational costs and exit pressure.
Source: Public Information
ABAB AI Insight
Custodia Bank was founded by Caitlin Long, who has years of experience on Wall Street. The Wyoming special purpose depository institution license is its core path. After applying for a master account in 2020, it faced rejection through district court, a 2-1 ruling from the Tenth Circuit, and a 7-3 full review denial. The association has previously submitted briefs multiple times during the district court and appellate stages, focusing on the historical trajectory of the dual banking system being eroded by federal discretion.
On the capital path, the association mobilized resources from over 130 member firms and the Gibson Dunn litigation team, upgrading their funding and legal firepower from lower courts to the Supreme Court, motivated by the goal of securing direct access for state-chartered banks to the Federal Reserve payment system, avoiding systemic exclusion of crypto-related businesses, and strategically continuing the previous sustained resistance against regulatory pressure rather than seeking mere case-by-case relief.
Similar cases can be seen in the Fourth Corner Credit Union v. Kansas City Fed case, where the necessity of master accounts was recognized, and the recent comparison with Kraken obtaining a limited-use account. The current industry is at a stage of federal payment access control, pushing state-level innovation attempts towards judicial finality.
The structural judgment indicates a transfer of pricing power: the Federal Reserve, through master account discretion, transforms access to payment infrastructure into a business model filtering tool. The mechanism lies in the Monetary Control Act's mandatory language of "shall provide" being interpreted as discretionary, leading to the concentration of pricing and survival rights of the state banking system in the payment settlement process towards regional Federal Reserves, ultimately changing the underlying rules of who can directly participate in the national payment network.
ABAB News · Cognitive Law
- Payment channels are survival rights.
- Where discretion expands, innovation suffocates first.
- The collapse of the dual system begins with a single switch.