- The Blockchain Association filed an amicus brief at the Supreme Court, arguing against the earlier ruling of the lower courts in the Custodia Bank case.
- It warned the high court that affirming the previous decisions would give the Fed unchecked power to deny lawful businesses access to its master accounts.
The war on crypto has supposedly already ended at the federal level as President Donald Trump’s administration has been laying the foundation for a more crypto-friendly regulatory regime in the US. Add to that the supportive stance of the chairmen of independent federal regulatory agencies, such as the Securities and Exchange Commission (SEC) and the Federal Reserve.
However, it appears that remnants of the old anti-crypto regime still linger in the case of Custodia Bank, as it continues its battle against state-level banking regulators. It only shows that some branches of the Fed continue to impose hurdles that discriminate against even legitimate entities operating within the digital asset ecosystem. With that, debanking remains a persistent threat, potentially preventing these actors from accessing basic banking infrastructure, clearing services, and Fed master accounts.
The Blockchain Association, a leading non-profit organization supporting the digital asset community, has filed for an amicus brief at the Supreme Court (SC) in aid of Custodia Bank in its case against the Fed, particularly the institution’s Kansas City wing. The issue notably stemmed from the Kansas City Fed’s denial of a Fed master account to the Wyoming-chartered digital asset bank years ago, which the lower and appeals courts affirmed.
The Blockchain Association’s Amicus Brief at the Custodia Bank Case
An amicus brief is a petition filed by a party outside of a litigation with a strong interest in the matter. In this case, the Blockchain Association urged the SC to review whether federal regulators have the discretion to cut off lawful digital asset businesses with state-approved banking models from the broader banking system.
The association warned the SC that sustaining the Court of Appeals for the Tenth Circuit’s ruling, which sided with the Fed, would give the central bank extensive power to “debank disfavored industries or companies.” It would also undermine the nation’s dual-banking system.
Moreover, the group highlighted that such a level of authority risks cutting off lawful businesses from the central bank’s infrastructure that allows institutions to settle payments directly through its rails. State-chartered banks isolated from the system would have to contend with higher costs, greater counterparty risks, and inefficient delivery of services to customers. It likewise leaves them at the mercy of intermediary correspondent banks.
Furthermore, the Blockchain Association argued that no lawful entities should be excluded from essential banking services through regulatory pressure or abuses in administrative discretion.
The Kansas City Fed has until September 11 to respond to the issues raised in the Custodia Bank case.
