Digital asset bank Custodia is suing the Federal Reserve over an application delay

Digital asset bank Custodia, previously known as Avanti, is suing the Federal Reserve Board of Governors and the Federal Reserve Bank of Kansas City for delaying a decision on its application for a central bank master account.

A Federal Reserve master account allows institutions direct access to the Fed's payment systems. It enables the most direct access to the US's money supply available to financial institutions. Those without master accounts are often forced to rely on partner banks with master accounts to provide services.

The Wyoming-chartered crypto bank Custodia wants an account to "sharply reduce its costs" and "bring new products and options to users of financial services," according to the complaint. The bank says direct access is "vital" to its ability to operate effectively. Forbes first reported the news Tuesday.

But its application has been stuck in limbo before for more than a year and a half, according to its complaint.

Custodia filed its application with the Kansas City Fed in 2020. The Kansas City Fed confirmed Custodia's application was complete and contained "no showstoppers," according to the complaint. In the spring of 2021, the Fed board of governors stepped in and sought control of the decision-making process, starting the delay.

Between then and now, Custodia contends that it has exhausted all informal means of obtaining a decision on its application. 


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The firm argues the delay violates the one-year statutory deadline and breaches the schedule on the filings, which says a master account decision usually takes five to seven days. 

The delay has also forced the bank to put off offering its services as a solo bank and instead partner with a correspondent bank that has a master account, which the firm contends is costlier and introduces counterparty credit risk and settlement risk that it wished to avoid by having a master account of its own.

"There is a black-box bureaucratic process with no clear rules or standards for processing applications, no clear lines of accountability or responsibility between the Board and Kansas City Fed, and no clear end to Custodia’s application saga in sight," said the complaint.

Custodia is seeking a "speedy hearing" and a court order compelling the Kansas City Fed and the Board to process and decide the application within 30 days of the order. 

The full complaint can be read below:

Custodia Filed Complaint by MichaelPatrickMcSweeney on Scribd

About Author

Aislinn Keely is a reporter on The Block's policy team holding down the legal beat. She covers court decisions, bankruptcies, regulatory actions and other key moments in the legal sphere, putting them in context for the wider crypto industry. Before The Block, she lent her voice to the NPR affiliate WFUV and helmed Fordham University's student newspaper. Send tips or thoughts on all things policy and legal to or follow her on Twitter for updates @AislinnKeely.