Imagine the federal government as that no-nonsense aunt who, despite your best efforts, decides you’re not quite ready for the shiny new toy. On October 31st – talk about spooky – the US Court of Appeals for the Tenth Circuit confirmed what we all secretly suspected: the Fed has the final say on whether your crypto startup gets a golden ticket to the banking carnival. Yep, Custodia Bank, the darling of the crypto world, was shown the door with a 2-1 decision that echoes through the hallowed halls of finance like a particularly boring rock concert.
The court sprinkled in some legal jargon – apparently, Federal Reserve Banks have a discretionary thumb to say “nope” to applications from institutions that, by some strange coincidence, meet all the eligibility requirements. Judge Ebel’s opinion scoffed at Custodia’s protest that the law says services “shall be available,” because apparently, “shall be available” is just a suggestion, like “please” or “maybe.” Instead, the court threw in the Federal Reserve Act’s clause claiming they “may receive” deposits – which, according to the court, sounds more like a polite invitation than a binding obligation.
Now, for those of us who haven’t been drowning in legal texts, master accounts are basically VIP passes that let banks directly hobnob with the Fed’s payment systems. Think of it as having the secret access code to the master party. Custodia’s argument was that the law’s language about services “shall be available” meant they were entitled to one, kind of like being promised a cookie and then being told, “Nah.” They’re a Wyoming-chartered Special Purpose Depository Institution (try saying that three times fast), and they thought their credentials made them special enough for the Fed’s favor.
Court’s Reasoning and Dissent – the Drama Unfolds
The majority, with the gusto of someone trying to sell you sand in a desert, claimed that interpreting the law as requiring automatic access would be “finding an elephant in a mousehole.” Apparently, Congress thought that the Fed might say “no,” and so it’s all good. They even pointed to the 2022 Toomey Amendment – a sort of government “LOL, just kidding” that requires reporting rejected applications from eligible entities. So, it’s like the law is saying, “You’ll get an answer eventually, but it might be a big fat no.”
Judge Tymkovich, not one to shy away from dramatic dissent, argued that the phrase “shall be available” isn’t up for debate – it’s a clear command. His dissent also warned the ruling could give unappointed Fed officials too much power, like handing out mystery coupons in a game show, never to be reviewed again. Ominous stuff, if you like your legal battles served with a side of paranoia.
Meanwhile, Custodia’s CEO, Caitlin Long – a Wall Street veteran and crypto evangelist – was more or less told, “Sorry, no magic unicorn for you.” The bank applied back in October 2020, and after a 19-month wait that felt like the duration of a very boring decade, they sued the Fed over delays that could only be described as “deliberately slow.”
And that, my friends, is how the crypto dream got a little more distant, as the Federal Reserve continues to play gatekeeper in the financial playground, leaving some to wonder if the game is rigged or if they’re just bad at playing.
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2025-11-01 02:47