The Blockchain Association has urged the US Supreme Court to review Custodia Bank’s dispute with the Federal Reserve over access to a master account, placing the payment-system implications of the case at the center of the crypto industry’s latest legal intervention.
The trade group filed an amicus brief dated August 12 in support of Custodia’s petition for a writ of certiorari. The filing asks the Supreme Court to take the case; it is not a ruling that the Court will hear it, nor does it reverse the Federal Reserve Bank of Kansas City’s denial of Custodia’s application.
Custodia, a Wyoming-chartered bank focused on digital assets, sought a master account to access Federal Reserve payment services directly. Without one, a bank generally must rely on a correspondent institution for those services. The Blockchain Association argues that federal law requires covered Federal Reserve services to be available to eligible nonmember depository institutions and that the appeals court gave the Fed too much discretion to deny access.
Why the dispute matters to payment operations
A Federal Reserve master account records balances used to settle transactions and provides the operational foundation for access to central-bank payment services. The association’s brief identifies Fedwire, FedNow, automated clearing house services and check processing among the services relevant to the dispute.
Direct access and correspondent access are not operationally equivalent. A correspondent adds another institution to the transaction chain, along with its pricing, risk limits, service availability and termination decisions. For a payment provider or digital-asset business that depends on a bank for dollar settlement, the distinction can affect cost, liquidity management and resilience even when the end customer never sees the intermediary.
The brief argues that denying master-account access can leave a state-chartered bank exposed to additional counterparty and settlement risk. That is the association’s legal and policy position, not a judicial finding. The Supreme Court would first have to grant review before it could address the statutory question presented by Custodia.
The case tests the boundary between chartering and payment access
Custodia’s case also raises a structural question for the US dual banking system. A state may charter an institution, but that charter does not by itself deliver direct access to Federal Reserve payment infrastructure. If a Reserve Bank has broad discretion to withhold a master account, it can constrain the practical usefulness of a state-approved banking model without formally invalidating the charter.
The Blockchain Association says that result gives the Federal Reserve effective veto power over state-chartered institutions. The brief points to Custodia’s Wyoming framework, under which the bank says customer demand deposits would be backed by high-quality liquid reserves rather than used for lending. The association contends that risk can be managed through account conditions and payment-system controls instead of complete denial.
The Federal Reserve and the lower court have treated account access differently. Cointelegraph reports that the Tenth Circuit concluded the Kansas City Fed had discretion to reject Custodia’s request and that the appeals court declined rehearing in March. The new filing therefore represents industry support for Supreme Court review, not a new account approval or an operational change at Custodia.
A proposed alternative does not resolve the litigation
The amicus brief also addresses the Federal Reserve’s 2026 proposal for limited-purpose “Payment Accounts.” According to the filing, the proposed accounts would not provide the full service set available through conventional master accounts, including FedACH access, and would impose other restrictions.
Those details matter because a narrower account can support some payment activity without replacing the broader settlement capabilities used for payroll, bill payments and business-to-business transfers. For fintechs, stablecoin companies and their banking partners, the practical question is not simply whether some central-bank access exists, but which services are available and on what balance, liquidity and risk terms.
The proposal remains separate from the legal issue before the Supreme Court. The association argues that a limited product does not answer whether the governing statute requires broader access for eligible institutions. The brief’s characterization of the proposal is advocacy in pending litigation and should not be read as the Court’s view.
What payment companies should watch next
The immediate milestone is whether the Supreme Court grants Custodia’s petition. If it declines, the lower-court outcome remains in place. If it grants review, the case could clarify how much discretion Reserve Banks have over account applications and how statutory access to Federal Reserve services applies to state-chartered institutions.
Payment businesses should also track the Federal Reserve’s separate account proposal on its own terms. Eligibility, service coverage, balance limits, intraday credit, settlement finality and termination rights will determine whether a limited account changes reliance on correspondent banks in practice.
For the crypto-payments sector, the filing is significant because it connects banking access directly to payment infrastructure rather than treating “debanking” only as an account-closure issue. But no access right changed on August 12. The development is a legal argument asking the country’s highest court to review an unresolved dispute.