On Wednesday (12), the Blockchain Association filed an amicus brief with the U.S. Supreme Court supporting Custodia Bank's request that the court review its dispute against the Federal Reserve (Fed) over the refusal to grant a master account. In the document, the crypto-asset industry advocacy group argues that the central bank cannot use access to the payments system to exclude legally incorporated companies, a practice it called "debanking" of the digital asset industry.
The case
An amicus brief is a legal filing submitted by third parties to provide additional arguments to a court. The case involves Custodia Bank's request — a Wyoming-based crypto bank — to obtain a master account, which would allow it to settle payments directly with the Fed. The bank offers digital asset custody services, payment and settlement infrastructure, as well as products related to dollar-pegged stablecoins for institutional clients.
In October, an appeals panel ruled that eligibility for the account does not obligate the Fed to grant it. In December, the bank asked for the case to be reheard by the full Tenth Circuit. The Blockchain Association now supports review by the Supreme Court.
The association's arguments
In the amicus brief, the Blockchain Association argues that a lower court's ruling in favor of the Fed gives federal regulators a silent way to exclude legitimate businesses from the banking system. "The decision ratifies the misuse of the Fed's payment services to promote a prohibited policy objective — the debanking of the digital asset industry," the group wrote.
The association also argues that the Fed's denial threatens the dual banking system, in which banks can be regulated by state and federal authorities. According to the brief, if the ruling stands, federal regulators could override state banking decisions by denying access to the payments system. "Whether federal regulators, based on discretionary whims, can invade state prerogatives and debank legal businesses is a question of exceptional importance, with far-reaching consequences for the national economy," they wrote.
Operation Choke Point 2.0
The brief also frames Custodia's dispute as the latest phase of the so-called Operation Choke Point 2.0, a reference to initiatives by the Obama and Biden administrations that, according to critics, pressured banks to cut ties with disfavored sectors. "In a well-documented campaign called Operation Choke Point 2.0, the federal government under the previous administration used vague rules, excessive discretion, informal guidance, and aggressive enforcement actions to pressure banks not to serve digital asset clients," the document stated.
The Supreme Court has not yet decided whether to hear the case. The Blockchain Association's filing asks the justices to determine the extent to which the Fed can control access to the U.S. payment system.
