Same case: order denying rehearing en banc, with Tymkovich, J., dissenting (joined by Eid, J.)
Document text
Research, not advice. Part of the Bitcoin research archive (October 2026). Claims labelled unverified, contested or fringe are reported, not endorsed; statuses of bills and rules are as of the date checked. Government, court and patent records are public domain; the research notes are CC BY 4.0.
Appellate Case: 24-8024 Document: 201 Date Filed: 03/13/2026 Page: 1
FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS March 13, 2026
Christopher M. Wolpert
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________
CUSTODIA BANK, INC.,
Plaintiff - Appellant,
No. 24-8024
v. (D.C. No. 1:22-CV-00125-SWS)
(D. Wyo.)
FEDERAL RESERVE BOARD OF
GOVERNORS, et al.,
Defendants - Appellees.
------------------------------
AMERICANS FOR PROSPERITY
FOUNDATION-WYOMING, et al.,
Amici Curiae.
_________________________________
ORDER
_________________________________
Before HARTZ, TYMKOVICH, BACHARACH, PHILLIPS, McHUGH, MORITZ,
EID, CARSON, ROSSMAN, and FEDERICO, Circuit Judges. ∗
_________________________________
This matter is before the court on the Petition for Rehearing En Banc by Custodia
Bank, Inc.; the Response to Petition for Rehearing En Banc by Appellee Federal Reserve
Board; Defendant-Appellee Federal Reserve Bank of Kansas City’s Response to Petition
The Honorable Jerome A. Holmes and the Honorable Scott M. Matheson, Jr. are
∗
recused in this matter.
Appellate Case: 24-8024 Document: 201 Date Filed: 03/13/2026 Page: 2
for Rehearing En Banc; and Appellant’s Motion for Leave to File a Reply Brief in
Support of Petition for Rehearing En Banc, which was accompanied by a proposed reply.
As an initial matter, Appellant’s motion for leave to file a reply in support of the
petition is GRANTED. The Clerk’s Office shall file Appellant’s reply as of the date it
was submitted to the court. In addition, the pending motions for leave to file amicus
briefs are GRANTED. All amicus briefs submitted in connection with the court’s
consideration of whether to grant en banc rehearing will be filed as of the date they were
submitted.
The petition, responses, and proposed reply were circulated to all non-recused
judges of the court who are in regular active service, and a poll was called. The poll did
not carry. Consequently, the petition is DENIED.
Judges Hartz, Tymkovich and Eid voted to grant en banc rehearing. Judge
Tymkovich has filed a separate dissent from the denial of en banc rehearing, which is
joined by Judge Eid.
Entered for the Court,
PER CURIAM
2
Appellate Case: 24-8024 Document: 201 Date Filed: 03/13/2026 Page: 3
No. 24-8024, Custodia Bank, Inc. v. Federal Reserve Board of Governors, et al.
TYMKOVICH, Circuit Judge, dissenting from the denial of rehearing en banc.
At issue is the critical question of whether Congress has given the Federal
Reserve Banks unfettered discretion to deny a state-chartered bank’s master account
application. The majority held that it has such power, but I disagree. Without a
master account, a bank cannot operate in the modern banking system. By endorsing
unreviewable discretion to deny accounts, we effectively hand the Reserve Banks a
veto over states’ chartering power. The constitutional ramifications of allowing
unappointed bank officials to wield such significant and unreviewable executive
authority are too weighty to brush aside. This case’s implications for the continuing
viability of our state-federal dual banking system carry exceptional importance.
These issues warrant scrutiny and merit our full court’s consideration.
I respectfully dissent from the denial of rehearing en banc.
I.
Custodia Bank is a Wyoming-chartered Special Purpose Depository Institution
(SPDI). Its stated mission is “to provide banking services for digital asset companies
and to serve as a bridge between digital assets and the U.S. dollar payment system for
institutional customers.” Majority Op. 11. By virtue of its state charter, Custodia is
legally eligible for a master account with the Federal Reserve Bank of Kansas City.
A master account is a financial institution’s bank account with the Federal Reserve
and is required for access to Reserve Bank services. See Fourth Corner Credit Union
v. Fed. Rsrv. Bank of Kansas City, 861 F.3d 1052, 1053 (10th Cir. 2017) (opinion of
Appellate Case: 24-8024 Document: 201 Date Filed: 03/13/2026 Page: 4
Moritz, J.). Among those services are the Reserve Banks’ wire and electronic
transfer systems, which allow depository institutions to move money. Thus, a master
account is “indispensable” for a bank’s operations, Fourth Corner Credit Union, 861
F.3d at 1064 (opinion of Bacharach, J.), and being denied one is akin to a death
sentence.
Custodia applied for a master account with the Reserve Bank in October 2020.
In January 2021, the Bank confirmed Custodia was eligible and told it there were “no
showstoppers” with its application. While the application was pending, the Federal
Reserve Board of Governors published guidelines for the Reserve Banks to use in
evaluating master account requests. Guidelines for Evaluating Account and Services
Requests, 87 Fed. Reg. 51099 (Aug. 19, 2022). Under those guidelines, Custodia
was subject to the strictest level of review. Though the Reserve Bank typically
moves quickly on master account applications, it sat on Custodia’s for years. Then,
in January 2024, the Bank sent Custodia a letter denying its application.
Custodia sued the Federal Reserve Board under the Administrative Procedure
Act, 5 U.S.C. § 706(2), and the Reserve Bank under the Mandamus Act, 28 U.S.C.
§ 1361. The district court determined, and the majority agrees, that the APA claim
failed for lack of final agency action, and the Reserve Bank has discretion over
master accounts and is therefore not subject to mandamus. I do not agree that
Reserve Banks have discretion over account applications and would have allowed the
mandamus claim to go forward.
2
Appellate Case: 24-8024 Document: 201 Date Filed: 03/13/2026 Page: 5
II.
The case comes down to a single question. Has Congress given Reserve Banks
discretion to deny eligible institutions’ applications for master accounts? The answer
lies in statutory interpretation.
The Reserve Banks started issuing master accounts in 1998 to consolidate and
simplify accounting for depository institutions. One consequence of master
accounts’ relative youth in the Reserve System is that no statute mentions them by
name. But the Depository Institutions Deregulatory and Monetary Control Act of
1980 (MCA) requires the Board to create a fee schedule for Reserve Bank services
and specifies “[a]ll Federal Reserve bank services covered by the fee schedule shall
be available to nonmember depository institutions and such services shall be priced
at the same fee schedule applicable to member banks.” 12 U.S.C. § 248a(c)(2)
(emphases added). A plain reading of this language reveals two nondiscretionary
commands to the Reserve Banks—access to services and equal pricing for them. And
when “statutory language is plain, we must enforce it according to its terms.” King v.
Burwell, 576 U.S. 473, 483 (2015). The statute produces a simple syllogism: all
eligible nonmember institutions are entitled to services, access to services requires a
master account, so every eligible nonmember institution is entitled to a master
account.
Custodia is undisputably eligible for a master account. Section 248a adopts
the definition of “depository institution” from 12 U.S.C. § 461(b)(1). And Custodia
falls under § 461(b)(1)(A)(i) as a bank eligible to become an insured bank under
3
Appellate Case: 24-8024 Document: 201 Date Filed: 03/13/2026 Page: 6
section 5 of the Federal Deposit Insurance Act. Custodia’s FDIA-eligibility is
secured by its status as a Wyoming-chartered bank “engaged in the business of
receiving deposits.” 12 U.S.C. § 1312(2)(A)–(B); see also Wyo. Stat. Ann. § 13-12-
103(b)(vii)(E) (2025) (confirming SPDIs may receive deposits under Wyoming law).
To me, the case is clear. Custodia is an eligible nonmember depository
institution, it has applied for a master account, and the Reserve Bank lacks discretion
to deny it one. I would go no further.
III.
But the majority embraced a contextual interpretation advanced by the Reserve
Bank. The theory has a few key steps, which I briefly recount. It begins with a
reading of the Federal Reserve Act (FRA) as having always given the Banks
discretion over accepting deposits, see 12 U.S.C. § 342. From there, it says
discretion over deposits only makes sense if the Banks also have discretion over
deposit accounts. Next, it rejects the idea that the MCA constrained that discretion
as an “elephant in a mousehole.” Majority Op. 7. Finally, the majority does not
consider its interpretation’s constitutional implications because, in its view, Custodia
waived that argument. I disagree at each step.
First, the discretion the majority identifies in § 342 is not the heart of that
statute. The statute does not use the word discretion and the only clause that can be
read to confer it says the Banks “may receive . . . deposits of current funds in lawful
money, [etc.].” 12 U.S.C. § 342. Instead of a grant of broad discretion, § 342 merely
establishes the background principle that gives the Reserve Banks authority to accept
4
Appellate Case: 24-8024 Document: 201 Date Filed: 03/13/2026 Page: 7
deposits—“words of authorization merely.” Farmers’ & Merchants’ Bank of Monroe
v. Fed. Rsrv. Bank of Richmond, 262 U.S. 649, 662 (1923). So I’m unconvinced that
the statute gives the Banks unconstrained discretion to accept or reject deposits
without reason or explanation.
Second, whatever discretion § 342 grants over deposits does not necessarily
entail discretion over accounts. The majority notes that forcing the Reserve Banks to
issue accounts and then scrutinize every deposit for potential threats to financial
stability would be cumbersome. That may be so, but the statute only discusses
deposits, see 12 U.S.C. § 342, and courts interpret statutes’ language, not their
predicted policy impacts, Burrage v. United States, 571 U.S. 204, 218 (2014) (“The
role of this Court is to apply the statute as it is written—even if we think some other
approach might ‘accord with good policy.’” (quoting Comm'r v. Lundy, 516 U.S. 235,
252 (1996))). Section 342 is silent on efficiency, and I would not read beyond the
text to bring it into play.
Third, if § 342 conferred the discretion the majority claims, the MCA is the
later-in-time statute and eliminated that discretion through § 248a. Congress
undoubtedly has the authority to modify the Reserve Banks’ discretion. It did so in
1916 by allowing the Banks to accept deposits in maturing bills. See Federal Reserve
Act Amendments, Pub. L. No. 64-270, 39 Stat. 752 (1916). While the 1916
amendments expanded discretion, § 248a constrained it.
The majority’s attempt to limit § 248a’s command by reference to the Toomey
Amendment is also unconvincing. That provision, passed in 2022, requires the
5
Appellate Case: 24-8024 Document: 201 Date Filed: 03/13/2026 Page: 8
Reserve Board to establish a “public, online, and searchable database” tracking all
master account requests and listing whether the request “was approved, rejected,
pending, or withdrawn.” 12 U.S.C. § 248c(b)(1)(B)(ii). According to the majority,
the Amendment recognized the Banks could reject account applications and thereby
affirmed their discretion. But that ignores the very good nondiscretionary reason a
Reserve Bank can deny an application—the applicant is not statutorily eligible for an
account. And it neglects the transparency function the database plays by forcing the
Reserve Banks to identify applications they reject for any reason, permissible or not.
Ultimately, I read the Amendment as supporting that transparency objective through
the database requirement, nothing more. 1
Fourth, the majority counsels against my reading of § 248a as “find[ing] an
elephant in a mousehole.” Majority Op. 31. I agree that § 248a(c)(2)’s placement in
a part of the MCA dealing with pricing schedules and primarily directed at the
Reserve Board is imperfect. But the placement does not make the statutory language
1
I reach this interpretation based solely on the statutory text. But to the extent
that a reader might be persuaded by legislative history, I note the Amendment’s
sponsor has endorsed a reading in line with transparency objectives and repudiates
any interpretation that confers (or “affirms”) discretion over master accounts. See
Br. for Former Senator Patrick J. Toomey as Amicus Curiae in Supp. of Neither Party
12 (“The focus was consistently, and exclusively, on promoting transparency as to
which institutions held and had applied for master accounts.”); Br. for Senator
Cynthia M. Lummis & Former Senator Patrick J. Toomey as Amici Curiae in Supp.
of the Pet. for Reh’g En Banc 9 (“The effort to pass the Amendment was bipartisan,
and it was ultimately supported by a broad range of both Republicans and Democrats
across both the House and Senate, who recognized the importance of providing
transparency in line with other federal regulators.”).
6
Appellate Case: 24-8024 Document: 201 Date Filed: 03/13/2026 Page: 9
any less clear. Besides, the MCA is no mousehole. It upended the bargain between
the Federal Reserve and nonmember banks through a compromise: “[a]ll depository
institutions would be subject to federally established reserve requirements and in
return all depository institutions would get access to the Federal Reserve’s payment
services.” Julie Andersen Hill, From Cannabis to Crypto: Federal Reserve
Discretion in Payments, 109 Iowa L. Rev. 117, 168 (2023). Even the Federal
Reserve has recognized the MCA “changed the way the Fed provided services.”
Federal Reserve System: The First 100 Years, Fed. Rsrv. Bank of Phila. (Jan. 2021).
Mandating that eligible nonmember institutions, like Custodia, have access to the
Reserve Bank payment services conforms with the policy changes Congress made in
the MCA.
Finally, the majority is as convinced as I am that the relevant statutes are
unambiguous—we just disagree on what they mean. Perhaps we should take that as a
cue that things are not quite so clear as they appear to each of us. If that is so, we
must interpret any ambiguity to avoid creating a constitutional problem. Clark v.
Martinez, 543 U.S. 371, 380–81 (2005). The majority’s interpretation does the
opposite. Giving the Reserve Banks unreviewable discretion to deny master accounts
makes it likely that Reserve Bank presidents wield “significant authority pursuant to
the laws of the United States” and are officers of the United States thereby. Edmond
v. United States, 520 U.S. 651, 662 (1997). But the processes for appointing and
removing Reserve Bank presidents—which involve boards of directors composed of
private citizens selected, in part, by private member banks, see 12 U.S.C. §§ 304–05,
7
Appellate Case: 24-8024 Document: 201 Date Filed: 03/13/2026 Page: 10
341—do not align with the Constitution’s procedures for Article II officers, see U.S.
Const. art. II, § 2, cl. 2. My interpretation avoids this conflict by limiting the Bank
presidents’ authority such that they are not “officers” in the constitutional sense.
Rather than endorse this simple solution, the majority skirts avoidance by
holding Custodia waived the argument. I agree that Custodia waived any stand-alone
Appointments Clause challenge to the constitutionality of the Bank president’s
selection by failing to present it in the opening brief. But that does not prevent us
from considering the appointments issue for our statutory interpretation. Instead, as
Clark explained, we “must consider the necessary consequences” of our interpretative
choice and avoid a constitutional quagmire. 543 U.S. at 380–81 (emphasis added).
Applying the canon of constitutional avoidance only when a party raises it might
allow us to adopt constitutionally questionable interpretations when no party does.
That does not align with our duty to get the law right.
IV.
A final note on two issues raised by the Federal Reserve defendants but not
treated by the majority in depth.
The Reserve Bank seeks to undercut my syllogism linking service access to
master accounts by claiming a master account is not technically necessary. In
support, it points to the possibility for Custodia to establish a correspondent
relationship with a third-party institution to transact through its master account.
But I do not believe that possibility meets § 248a’s mandate. First, there is no
assurance that Custodia can convince another bank to agree to a correspondent
8
Appellate Case: 24-8024 Document: 201 Date Filed: 03/13/2026 Page: 11
relationship. That burden is especially heavy on Custodia given the stigma attached
to having its account application denied. Even if it succeeds, a correspondent
relationship places it at the mercy of another private institution that might condition
access or terminate it on a whim. But even more troubling, the Reserve Banks claim
discretion to terminate a correspondent relationship at any time. Fed. Rsrv. Banks,
Operating Circular No. 1 § 210 (Sep. 1, 2023),
https://www.frbservices.org/binaries/content/assets/crsocms/resources/rules-
regulations/090123-operating-circular-1.pdf. And correspondent relationships do not
provide access to the full suite of Reserve Bank services. Id. § 2.7 (“Correspondent –
Respondent relationships cannot be established for FedWire® Funds Service
transactions, Fed Funds checks, and Custodial Inventory Program transactions, which
must settle in a Financial Institution’s own Master Account.” (emphasis added)). So
the only way to guarantee full service access for all eligible institutions is for the
Reserve Banks to grant them master accounts upon request.
Lastly, the Reserve Bank argues it cannot guarantee financial-system stability
without discretion over master accounts. But the Banks have other tools to mitigate
potential risk. A reserve bank can still reject deposits it concludes are risky. Under
12 U.S.C. § 342, and § 248a(c)(2), the Banks can impose on nonmembers all
requirements that apply to members. On the other hand, the Reserve Banks first
started issuing master accounts in 1998 and, to my knowledge, denied an application
for the first time in 2015. See Fourth Corner Credit Union, 861 F.3d at 1053
(opinion of Moritz, J.). That suggests the Fed has managed risky banks with master
9
Appellate Case: 24-8024 Document: 201 Date Filed: 03/13/2026 Page: 12
accounts for years, and I am confident it still can. The Fed can handle its policy
concerns with policy innovation rather than slamming the door shut to innovative
banks and insulating itself from judicial review.
V.
Holding that the Reserve Banks have unreviewable discretion over master
accounts places us on the wrong side of the statutes and, likely, that of the
Constitution as well. The case’s consequences for the financial industry and its
impact on the state-federal balance in banking regulation make it exceptionally
important. I would grant the petition for rehearing en banc, and respectfully dissent
from its denial.
10