Blockchain Association Files Supreme Court Brief Supporting Custodia's Fed Access Fight

The Blockchain Association filed an amicus brief this week urging the Supreme Court to rule that the Federal Reserve cannot broadly deny eligible state-chartered banks direct access to its payment infrastructure, backing Custodia Bank in a case that could reshape how digital asset firms connect to the U.S. financial system.

The brief cuts to a straightforward legal question with sweeping practical consequences: does the Fed have unchecked discretion to refuse master account access to banks that meet formal eligibility criteria? A master account is the gateway to the Fed's payment rails, enabling institutions to send and receive funds through Fedwire and the ACH network without relying on a correspondent bank as an intermediary. Without one, crypto-focused banks must route transactions through traditional banks that are increasingly reluctant to serve them.

"The Fed should not have broad discretion to deny eligible state-chartered banks direct access to its payment system."

Blockchain Association, via Supreme Court brief

Custodia Bank has been pursuing a master account since 2021. The Federal Reserve rejected the application, and subsequent legal challenges through lower courts failed to compel the central bank to grant access. The Supreme Court's decision to take up the case elevates what began as an administrative dispute into a constitutional question about the limits of Fed authority over state-chartered institutions. Custodia was founded by Caitlin Long, a longtime advocate for crypto banking infrastructure, with backing from investors including Kraken co-founder Jesse Powell.

The Fed's likely defense rests on prudential grounds. Regulators have consistently argued that crypto-focused institutions carry elevated anti-money laundering and know-your-customer compliance risks, and that extending master account access to them could introduce systemic vulnerabilities into payment infrastructure that underpins trillions of dollars in daily settlement. The central bank has also suggested, without codifying it formally, that eligibility criteria extend beyond the statutory minimum. That ambiguity is precisely what Custodia and the Blockchain Association are challenging: if the standards for denial are unstated and effectively unreviewable, the Fed's discretion becomes unlimited in practice.

A ruling in the bank's favor would establish that state-chartered institutions meeting baseline statutory requirements have a legally enforceable claim to master account access, constraining the Fed's ability to exclude crypto-native banks on policy grounds alone. That precedent would matter for any digital asset firm pursuing a banking charter as a path to direct Fed access. Conversely, a ruling affirming broad Fed discretion would ratify the current dynamic, where regulators can effectively wall off crypto firms from payment infrastructure without providing formal, contestable reasons. The Blockchain Association's decision to file at the Supreme Court level signals that the industry views this as a foundational infrastructure question, not a narrow dispute about one bank's application.

This case arrives at a moment when the broader regulatory posture toward crypto banking has shifted considerably. The OCC issued updated guidance in 2025 clarifying that federally chartered banks may engage in certain crypto activities, and Congress has advanced stablecoin legislation that presupposes some degree of crypto-bank integration with the Fed system. A Supreme Court ruling that the Fed's denial authority is effectively unreviewable would cut against that legislative direction, creating a tension between congressional intent and central bank practice that lawmakers would likely need to resolve explicitly.

The Court's eventual ruling, expected sometime in the 2026-2027 term, will determine whether digital asset firms can access the Fed's own payment rails, or whether the central bank retains a unilateral veto over which banks get to participate.