US court rules against blockchain bank’s plea for declaratory judgement

Wyoming’s first SPDIs: Custodia Bank's search for a Federal Reserve master account has faced a setback as United States District Court for District of Wyoming ruled against bank's plea for a declaratory judgment. Despite ruling, Custodia remains resolute, stating that it is exploring all available options, including possibility of an appeal, according to media reports. 

court's decision, issued by Judge Scott Skavdahl on March 29, dismissed Custodia's request for a Federal Reserve master account, which is crucial for facilitating access to Federal Reserve's payment systems, often referred to as "a bank account for banks."

Custodia argued that without this master account, it would be at a disvantage compared to or banking institutions, particularly in offering custodial services for crypto-assets. bank highlighted role of having equal footing in financial landscape, rar than being reliant on intermediary banks.

However, Judge Skavdahl ruled that Custodia is not entitled to compel Federal Reserve Bank of Kansas City (FRBKC) to issue its master account, affirming FRBKC's decision in matter.

Custodia's journey towards obtaining a Federal Reserve master account began in October 2020 when it submitted its application. rejection of this application by Federal Reserve in January 2023, citing concerns about Custodia's involvement in crypto space, marked a strong setback for bank.

As one of Wyoming's first Special Purpose Depository Institutions (SPDIs), Custodia, also known as a "blockchain bank," was established to assist businesses dealing with crypto assets. However, ro to full integration into tritional banking system continues to be challenging for Custodia, as it navigates regulatory hurdles and legal proceedings in its quest for equal standing in financial sector.