Custodia Bank filed an appeal in its ongoing case against the U.S. Federal Reserve on April 26.
The bank plans to appeal an earlier ruling that denied it the right to a Federal Reserve master account, a service that provides access to the central bank’s system without relying on intermediary banks.
In addition, Custodia will appeal a costs bill seeking $25,728.25 from one of the defendants, the Federal Reserve Bank of Kansas City, in connection with the deposit statements.
Custodia argued that the court should not hear costs until the appeal is decided and said the same court dismissed costs in a similar case. It claimed that awarding costs early would “risk chilling future legitimate lawsuits” against the Federal Reserve.
Previous statement
The court ruled on March 29 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 rule on the application. Custodia’s request was subsequently denied for review.
The court ruled that banks are not legally entitled to a master account just because they can apply for one. It also ruled that Custodia failed to demonstrate that the Federal Reserve Board of Governors had made a final decision on the rejection.
The court also ruled that it lacked jurisdiction over Custodia’s complaint due to the lack of a final decision.
Custodia Bank, which specializes in crypto services and is not FDIC insured, had argued that the Fed’s delay and eventual denial of the application was arbitrary and capricious and violated the Administrative Procedure Act (APA). The law regulates how federal agencies make and implement rules.
After the court ruling, Custodia CEO Caitlin Long said the bank would appeal the decision in a FOX Business interview on April 2.
Long also stated that recent cases have given the Federal Reserve “unfettered discretion” to deny new master accounts and close existing accounts. She added that Custodia was not the only bank affected by such a denial of access.
