Crypto group backs Custodia in Supreme Court battle over Fed access
WASHINGTON, Aug. 14. The Blockchain Association has filed in support of Custodia Bank at the Supreme Court over Federal Reserve payment system access, arguing the central bank should hold no broad discretion to reject eligible state-chartered banks from connecting directly to its payment infrastructure.
Key takeaways
- The Blockchain Association has filed a Supreme Court brief supporting Custodia Bank in its dispute with the Federal Reserve over direct access to the Fed's payment system.
- The group argues the Fed should have no broad discretion to reject eligible state-chartered banks from connecting directly to its payment infrastructure.
- The central legal question is whether the Federal Reserve can deny a state-chartered bank's master account application without exceeding a statutory ceiling on that authority.
- The Blockchain Association contends that where a state-chartered bank meets the statutory eligibility bar, the Fed's power to block a direct account is limited.
- The crypto industry views the outcome as reaching beyond Custodia, since a ruling affirming broad Fed discretion could affect any eligible state-chartered institution seeking to settle directly through the central bank's system.
WASHINGTON, Aug. 14. The Blockchain Association has filed in support of Custodia Bank at the Supreme Court over Federal Reserve payment system access, arguing the central bank should hold no broad discretion to reject eligible state-chartered banks from connecting directly to its payment infrastructure.
The Blockchain Association's argument
The group's position is narrow but pointed: eligibility should determine access. Where a state-chartered bank meets the statutory bar, the Fed's authority to block a direct account is limited, the Blockchain Association argues. The case challenges a reading of Fed discretion that, in the group's view, gives the central bank undue latitude to decide which qualifying institutions can reach its payment rails and which cannot.
What the fight turns on
At issue is whether the Federal Reserve can deny a state-chartered bank's application for a master account without running up against a statutory ceiling on that authority. Custodia's pursuit of direct payment system access, backed now by the Blockchain Association's brief, puts that question before the Supreme Court.
The Blockchain Association's intervention signals that the crypto industry views the outcome as reaching well past Custodia alone. A ruling that affirms broad Fed discretion could affect any eligible state-chartered institution seeking to bypass correspondent banking and settle directly through the central bank's own system.