The United States district court has decided against granting Custodia Bank a Federal Reserve master account and has also rejected the digital asset bank's request for a declaratory judgment. Despite this setback, Custodia Bank remains determined and is actively exploring alternative options.

Following the court's ruling, a Custodia Bank spokesperson mentioned, "We are carefully considering the Court’s verdict and evaluating all available choices, including the possibility of an appeal."

In a recent filing dated March 29 to the United States District Court of Wyoming, Judge Scott Skavdahl dismissed Custodia’s attempt to secure a Federal Reserve master account, which serves as a crucial tool for financial institutions to access the Federal Reserve’s payment systems.

Custodia argued that without a master account, it would face challenges in providing custodial services for crypto-assets similar to traditional banking institutions, putting the bank at a competitive disadvantage.

Moreover, Judge Skavdahl affirmed that Custodia does not have the right to overturn the decision made by the Federal Reserve Bank of Kansas City.

Custodia had applied for a Federal Reserve master account in October 2020, seeking access to the Fedwire network, which handled a substantial number of transactions in the previous year.

In January 2023, Custodia's membership application was declined by the Fed, citing concerns that its involvement in the cryptocurrency sector did not align with the legal requirements.

Custodia, recognized as one of Wyoming’s pioneering Special Purpose Depository Institutions (SPDIs) or "blockchain banks," was established to assist businesses unable to obtain banking services from the Federal Deposit Insurance Corporation due to their crypto-related activities.