A federal appeals court has rejected Crypto Bank Custodia’s final bid to challenge the U.S. Federal Reserve’s authority over master accounts, marking the end of a years-long legal battle.
The decision comes as the Federal Reserve system opens new pathways for crypto firms. The Federal Reserve Bank of Kansas City granted Kraken a limited master account-offering key payment rail access-making it the first crypto firm to gain such status.
The national-level Federal Reserve Board is now drafting a policy for 'skinny' master accounts, likely modeled on the Kansas City approach. Implementation remains uncertain, with full nationwide rollout still in early stages.
Judge Timothy Tymkovich dissented, warning that unreviewable Fed discretion over master accounts risks violating statutory and constitutional principles. He called the case pivotal for financial regulation and federal-state balance.
While analysts expect more crypto firms to follow Kraken, access will remain regionally dependent until a unified policy is adopted.