The request for a Federal Reserve master account by Custodia Bank was denied by the United States district court, resulting in the dismissal of the bank's petition for a declaratory judgment. Despite this, Custodia remains committed to exploring all available options.

On March 29, Judge Scott Skavdahl of the United States District Court of Wyoming rejected Custodia's plea for a Federal Reserve master account. This account is crucial for financial institutions to access the Federal Reserve's payment systems effectively.

Custodia argued that lacking a master account would put them at a disadvantage in providing custodial services for crypto-assets compared to other banks.

Judge Skavdahl ruled that Custodia did not have the authority to overturn the decision of the Federal Reserve Bank of Kansas City. The lawsuit against the Fed, initially filed in June 2022, claimed that the delay in decision-making about the master account application was unfair. The amended complaint in February stated that the Fed had wrongly instructed the Kansas City Fed to reject the application.

In the recent judgment, Judge Skavdahl emphasized that the law does not require the Fed to grant master account access to applicants and indicated that the decision was made by the Kansas City Fed, not the board of governors. Custodia originally applied for a Federal Reserve master account in October 2020 for access to the Fedwire network that handled over 193 million transactions the previous year.

The Federal Reserve rejected Custodia's membership application in January 2023, noting that its involvement in the crypto industry did not align with the necessary criteria under the law.

Custodia, one of Wyoming's initial Special Purpose Depository Institutions (SPDIs), commonly known as blockchain banks, was developed to cater to businesses involved in crypto activities unable to secure traditional banking services.