Fed Wins Legal Battle Over Custodia Bank Master Account Denial

Core Viewpoint - The US Court of Appeals for the Tenth Circuit upheld the Federal Reserve's authority to deny Custodia Bank's application for a master account, affirming a lower court's ruling in favor of the Federal Reserve [1][2]. Group 1: Court's Ruling - The court determined that Federal Reserve Banks have the discretion to reject master account applications from eligible institutions, rejecting Custodia's argument that the Monetary Control Act mandates account availability [2][3]. - The majority opinion emphasized that the language of the Monetary Control Act does not impose a mandatory duty to grant accounts, citing the discretionary authority granted by the Federal Reserve Act [2][4]. Group 2: Custodia Bank's Position - Custodia Bank, a Wyoming-chartered Special Purpose Depository Institution, argued that it was entitled to a master account due to its eligibility under federal law and the language of the Monetary Control Act [3][6]. - The bank's application for a master account was initially submitted in October 2020, and it filed a lawsuit against the Federal Reserve in 2022 over delays exceeding 19 months [6]. Group 3: Dissenting Opinion - Judge Tymkovich's dissent argued that the "shall be available" language in the Monetary Control Act is a clear command, raising concerns about the executive authority granted to unappointed officials by the majority ruling [5]. - The dissent highlighted potential issues under the Appointments Clause, suggesting that the ruling could lead to significant unreviewable authority [5].