A bank specializing in crypto services, Custodia Bank, has filed a notice of appeal in its ongoing case against the US Federal Reserve. The appeal, lodged on April 26, is in response to an earlier judgment that denied Custodia’s entitlement to a Federal Reserve master account. This master account service allows access to the central bank’s system without the need for intermediary banks.
In addition to appealing the denial of the master account, Custodia will also challenge a bill of costs from one of the defendants, the Federal Reserve Bank of Kansas City, which is seeking $25,728.25 related to deposition transcripts.
Custodia argued that the court should not determine costs until after the appeal has been decided, highlighting that the same court denied costs in a similar case. The bank asserted that awarding costs prematurely could have a chilling effect on future legitimate lawsuits against the Federal Reserve.
The court’s previous ruling on March 29 stated that Custodia Bank is not entitled to a Fed master account and denied a writ of mandamus that would have forced the Kansas Fed to make a decision on its application. The court found that banks are not automatically entitled to a master account simply by applying for one, and Custodia could not prove that the Federal Reserve Board of Governors had made a final decision on the rejection.
Custodia Bank had argued that the Fed’s delay and denial of its application were arbitrary and capricious, violating the Administrative Procedure Act. Following the court’s decision, Custodia’s CEO stated in a FOX Business interview on April 2 that the bank would appeal the ruling. She emphasized that recent cases have given the Federal Reserve unchecked power to deny new master accounts and close existing ones, affecting not just Custodia but other banks as well.
