The fight between Custodia Bank and the Federal Reserve just took another sharp turn, and it’s not in favor of crypto. A U.S. 10th Circuit Court of Appeals has sided with the Fed’s decision to deny Custodia Bank a master account, a move that effectively keeps crypto-focused banks locked out of the nation’s central banking system for now.

Why the U.S. Court Denies Custodia Bank a Master Account

Custodia applied for a Fed master account in 2020 to bridge crypto and traditional banking. After a 19-month wait, the Fed rejected the request in January 2023, citing weak risk management in its crypto-focused model. 

Custodia sued, arguing the Fed had no right to deny eligible applicants. However, the appeals court recently ruled in favor of…