Crypto bank Custodia files petition for a rehearing by all appellate judges

AI Summary4 min read

TL;DR

Custodia Bank petitions for full Tenth Circuit rehearing against Fed's master account denial, arguing it undermines state banking authority and raises constitutional concerns. This continues its legal battle for crypto banking access to U.S. payments system.

Key Takeaways

•Custodia Bank filed a petition for rehearing en banc with the Tenth Circuit Court of Appeals, challenging the Fed's denial of a master account.
•The bank argues the Fed's decision undermines state banking authority and raises constitutional questions about officials' appointment under Article II.
•Custodia contends the October ruling improperly gives the Fed 'unreviewable discretion' over payment infrastructure access, misreading the Monetary Control Act.
•The case represents a significant legal battle for crypto banking access to the U.S. payments system, with broader implications for state-chartered banks.
•Whether the full court will rehear the case remains uncertain, but the petition ensures the debate over crypto bank access continues.

Tags

Custodia BankFederal Reservemaster accountcrypto bankingTenth Circuit Courtlegal battlepayment system access

Crypto custodians are increasingly mindful of how stored tokens should be used in governing DeFi protocols. (Credit: NYPL)

What to know:

Custodia Bank has filed a petition for a rehearing en banc with the Tenth Circuit Court of Appeals in its legal battle against the Federal Reserve.
The bank argues that the Fed's denial of a master account undermines state banking authority and raises constitutional concerns.
The October ruling against Custodia is a significant setback in its efforts to gain access to the U.S. payments system.

Custodia Bank has filed a petition for a rehearing en banc with the Tenth Circuit Court of Appeals in its legal battle against the Federal Reserve.
The bank argues that the Fed's denial of a master account undermines state banking authority and raises constitutional concerns.
The October ruling against Custodia is a significant setback in its efforts to gain access to the U.S. payments system.

Wyoming-based crypto bank Custodia filed a new petition in its long-running legal battle against the Federal Reserve for access to a master account, requesting a rehearing en banc before the full Tenth Circuit Court of Appeals.

Custodia Bank is asking the court to reconsider its October ruling that sided with the Fed in denying the bank access to core central bank payment services, in a fight that has become a pacesetter for crypto banking access to the U.S. payments system.

In the petition for rehearing en banc filed on Dec. 15, Custodia is urging all active judges on the court, not just the original three-judge-panel, to revisit the October decision that upheld the Fed’s authority to deny master accounts even to state-chartered, federally supervised banks.

Custodia argued that the three-judge panel’s ruling improperly vests the Fed with “unreviewable discretion” over access to core payment infrastructure, undermining state banking authority and raising “serious constitutional questions” by entrusting that power to officials not appointed as officers of the United States under Article II of the Constitution.

The petition also argued that the panel misread the Monetary Control Act, which states that Federal Reserve services “shall be available” to eligible depository institutions. The bank contends the ruling improperly converts that language into optional discretion, allowing regional Federal Reserve banks to effectively override state banking charters.

The October ruling marked another setback for Custodia, which has litigated its exclusion from the Fed’s payment infrastructure since it first sued the Federal Reserve in 2022. Whether the full Tenth Circuit agrees to rehear the case remains uncertain, but the petition ensures the debate over crypto banks’ access to the financial plumbing is far from over.

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