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Federal Court Shuts Down Custodia Bank’s Master-Account Bid

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Crypto Breaking News

A U.S. federal appeals court has closed the book on Custodia Bank’s bid for direct access to the Federal Reserve’s master-account program, delivering a setback after years of legal maneuvering. In a 7-3 ruling, the U.S. Court of Appeals for the Tenth Circuit declined to rehear the case, leaving intact the Fed’s long-standing discretion over who receives master accounts and access to the central bank’s payment rails. The decision arrives as crypto firms continue to seek direct lines to Fed services, while other players in the sector push for broader access and clearer regulatory pathways.

Key takeaways

  • The Tenth Circuit rejected Custodia Bank’s final challenge in a 7-3 vote, effectively ending the bank’s bid for a Fed master account.
  • Custodia originally applied in October 2020; after initial Fed rejection, it argued that the Monetary Control Act entitles state-chartered banks to Fed services, including a master account.
  • Multiple courts have upheld the Fed’s discretion in granting master accounts, reinforcing the central bank’s gatekeeping role in access to payment rails.
  • Kraken became the first crypto platform to receive a master account from the Federal Reserve Bank of Kansas City on March 4, tying it to Fedwire payments, albeit with a narrower set of services than a traditional bank.
  • Disagreeing with the majority, Judge Tymkovich warned that a master account is “indispensable” for a bank’s operations and suggested denial could be viewed as a prohibitive outcome for a crypto-focused institution.
  • The case underscores ongoing regulatory debate about “skinny” or limited master accounts for crypto firms, signaling a cautious but evolving approach to central-bank access.

Market context: The ruling lands amid broader regulatory discussions about how crypto-native firms should access traditional financial rails and liquidity. As more players seek direct Fed access to improve settlement efficiency and risk management, regulators have signaled openness to narrower, crypto-specific arrangements, while maintaining the Fed’s discretionary authority over master accounts.

Why it matters

The decision reinforces a foundational policy stance: the Federal Reserve controls who earns entry to its payment system through master accounts. For Custodia, the outcome closes a five-year pursuit that began with ambitions to settle digital-asset transactions with direct Fed support, reducing the likelihood of a direct route around traditional correspondent banking relationships. The ruling clarifies that the Fed’s authority to grant or withhold master accounts is not easily trumped by statutory arguments and that courts are unlikely to compel the Fed to provide access in the absence of a clearly defined statutory mandate.

Yet the same period has also seen notable progress elsewhere. Kraken, a prominent crypto exchange, secured a master account from the Fed’s regional arm in Kansas City, marking a pivotal milestone for the sector’s integration with the U.S. central bank’s system. This development demonstrates that the Fed is willing to grant access, albeit selectively, to entities that can demonstrate robustness, compliance, and operational readiness to connect to Fedwire payments. The distinction between “full” access and the more limited services available to nontraditional banks highlights the evolving nature of central-bank engagement with digital-asset firms.

While Custodia’s setback narrows the path for state-chartered banks seeking direct Fed access, the broader ecosystem remains engaged in a pragmatic dialogue about what accommodations crypto firms should receive. Proponents of increased access argue that direct ties to the Fed could reduce settlement risk and improve liquidity management in a sector characterized by rapid custody and settlement needs. Opponents caution against broadening eligibility without stringent risk controls and robust compliance frameworks. The tension mirrors larger regulatory dynamics as policymakers weigh consumer protection, financial stability, and innovation in parallel tracks.

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The court’s opinion also underscores a practical reality: the Fed’s discretion has persisted through multiple adjudications. Although some judges have criticized the Fed’s stance, the majority’s analysis emphasizes that, absent a legislative change, master accounts remain a matter of administrative choice rather than automatic entitlement. In this sense, Custodia’s experience serves as a cautionary tale for other applicants that seek to accelerate entry into federal settlement rails without meeting the precise criteria the Fed applies in evaluating risk, governance, and operational readiness.

In the same thread, commentary around “skinny” master accounts—limited types of accounts designed to offer essential access without granting the full suite of services reserved for traditional banks—continues to gain attention. Advocates contend that even a pared-down pathway could substantially reduce the frictions crypto firms encounter when scaling and integrating with regulated financial infrastructure. Critics, however, argue that the integrity of the payment system requires careful calibration of who can participate and under what conditions. The recent disclosures, including Kraken’s march toward Fed-linked settlement capabilities, illustrate a cautious but tangible shift toward more inclusive mechanisms that balance safety with innovation.

What to watch next

  • Regulators and the Fed may continue refining criteria for “skinny” master accounts and similar arrangements for crypto firms.
  • Other applicants could reassess their strategies in light of the Custodia decision, potentially pursuing alternative means of direct Fed access or partnerships with traditional banks.
  • Ongoing regulatory discussions and potential policy guidance could shape how future master-account decisions are communicated and implemented.
  • Industry observers will monitor Kraken’s ongoing integration efforts and any further expansions of its Fed-connected capabilities.

Sources & verification

  • U.S. Court of Appeals for the Tenth Circuit — Opinion documenting the denial of Custodia’s appeal: https://www.ca10.uscourts.gov/sites/ca10/files/opinions/010111400884.pdf
  • Custodia Bank rehearing en banc master account coverage: https://cointelegraph.com/news/custodia-bank-rehearing-en-banc-master-account
  • Custodia crypto bank appeal federal reserve master account coverage: https://cointelegraph.com/news/custodia-crypto-bank-appeal-federal-reserve-master-account
  • Kraken receives master account and links to Fedwire coverage: https://cointelegraph.com/news/kraken-crypto-exchange-fed-master-account
  • Additional context on Fed services not related to central bank digital currencies: https://cointelegraph.com/news/federal-reserve-service-not-related-to-cbdcs

Why it matters

The court’s ruling crystallizes the principle that access to the Fed’s payment rails is not an automatic entitlement for crypto-focused banks. It foregrounds the Fed’s discretion as a central feature of how digital-asset firms can participate in the U.S. financial infrastructure, at least in the near term. For stakeholders seeking to integrate digital assets into mainstream settlement processes, the decision clarifies the legal landscape and raises the bar for establishing the robust governance, risk controls, and compliance frameworks that the Fed expects of applicants.

At the same time, the Kraken milestone demonstrates that meaningful progress is possible even within a system that remains cautious about crypto-adjacent actors. By securing a master account from a regional Fed bank, Kraken has opened a pathway to improved liquidity and settlement efficiency, though with a narrower set of services than those enjoyed by conventional banks. The contrast between Custodia’s unresolved bid and Kraken’s operational foothold suggests that the road to broader access will likely be incremental, tempered by risk, regulatory clarity, and demonstrated resilience in transaction processing and governance.

Sources & verification

To verify the key elements of this story, readers can consult the official court filing and the referenced industry coverage:

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  • The Tenth Circuit opinion PDF confirming the denial of Custodia’s appeal: https://www.ca10.uscourts.gov/sites/ca10/files/opinions/010111400884.pdf
  • Cointelegraph coverage on Custodia’s rehearing and related master-account discussions: https://cointelegraph.com/news/custodia-bank-rehearing-en-banc-master-account
  • Cointelegraph coverage on Custodia’s crypto-bank appeal and Fed master account issues: https://cointelegraph.com/news/custodia-crypto-bank-appeal-federal-reserve-master-account
  • Cointelegraph coverage on Kraken obtaining a master account: https://cointelegraph.com/news/kraken-crypto-exchange-fed-master-account

What the story means for the crypto ecosystem

As policy discussions evolve, the industry is watching how regulators balance the benefits of direct Fed access—lower settlement risk, faster liquidity management, and greater resilience—with the imperative to maintain safety, transparency, and financial stability. The Custodia ruling reinforces the notion that central-bank access is not guaranteed and that applicants must meet rigorous criteria and demonstrate systemic readiness. Simultaneously, Kraken’s milestone signals real-world progress and a potential blueprint for future entrants who can align with enhanced risk controls and compliance standards while leveraging more direct settlement capabilities. The next chapter will likely hinge on policy direction, the development of “skinny” account frameworks, and continued collaboration between policymakers, banks, and crypto firms to expand access without compromising systemic integrity.

Risk & affiliate notice: Crypto assets are volatile and capital is at risk. This article may contain affiliate links. Read full disclosure

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Polymarket rolls out stock and commodity contracts with Pyth price feeds

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Polymarket rolls out stock and commodity contracts with Pyth price feeds

Polymarket has partnered with oracle provider Pyth Network to launch traditional asset markets on its platform.

Summary

  • Polymarket partnered with Pyth Network to introduce equity, commodity, and stock-linked contracts.
  • The new markets include daily up or down and closing price contracts that reset at the end of each trading session.
  • Pyth Network is providing real-time price feeds from trading firms and market makers to serve as the resolution layer for the new contracts.

According to an Apr. 2 announcement, the latest addition brings daily up-or-down and closing price contracts for major equity indexes, alongside commodities such as gold and oil, and US-listed stocks. Outcomes on these contracts are determined using Pyth’s real-time price feeds, and the markets reset at the end of each trading session.

Pyth Network will act as the resolution layer for these markets, replacing manual or exchange-specific references with a standardized data source aggregated from trading firms and market makers.

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Simultaneously, Pyth has launched a data interface called Pyth Terminal, allowing users to track live price feeds and the reference values used to settle markets on Polymarket.

Oracle networks like Pyth bring off-chain data such as prices, foreign exchange rates, and commodities onto blockchains. These feeds are widely used across decentralized finance, prediction markets, and tokenized asset platforms, and have seen growing adoption, including by US government agencies.

PYTH price rallied over 70% after the announcement, while its market capitalization moved past $1 billion.

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The latest products on Polymarket were launched as the platform continues to cement its position as a leading prediction market operator.

Last month, the project secured a $600 million investment from Intercontinental Exchange, the parent company of the New York Stock Exchange, as part of a broader multibillion-dollar commitment.

Meanwhile, Polymarket made investments of its own by acquiring DeFi infrastructure startup Brahma for an undisclosed sum.

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Whale Turns Bearish Ahead of $2 Billion Bitcoin and Ethereum Options Expiry

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A whale accumulated more than 2,000 Bitcoin (BTC) put contracts overnight, targeting a move below $66,000, just as over $2.15 billion in Bitcoin and Ethereum (ETH) options settle on Deribit today, April 3.

The back-to-back repositioning signals that at least one large player sees downside risk in BTC’s current price range, even as call open interest still outnumbers puts across both assets.

Why the Whale Trade Matters

Options analytics platform Greeks.live flagged the position shift on April 2, noting the same whale had closed a profitable long trade hours earlier before pivoting bearish.

Per the analysts, the whale entered a long position at $66,000 and exited above $68,000, booking a confirmed profit.

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Within hours, a trader of comparable size began accumulating put contracts, this time betting on a move lower.

The rapid reversal is notable. A whale exiting a winning trade and immediately loading the opposite direction suggests a view that the $66,000–$68,000 zone is a resistance ceiling, not a launchpad.

Bitcoin Price Performance
Bitcoin Price Performance. Source: TradingView

With BTC trading at $66,575 and its max pain level set at $68,000, the spot price sits $1,425 below the level where options sellers profit most. If BTC fails to close that gap before settlement at 08:00 UTC, the bearish whale’s puts gain value.

The Expiry Data

Bitcoin accounts for $1.84 billion of today’s total notional value, with 27,590 contracts outstanding. Call open interest stands at 17,930 against 9,600 puts, giving a put-to-call ratio of 0.54.

Bitcoin Expiring Options
Bitcoin Expiring Options. Source: Deribit

The call skew still leans bullish in aggregate, but the whale’s 2,000-contract put position adds concentrated downside weight near the $66,000 strike.

Ethereum’s expiry is smaller but similarly structured. With $319.9 million in notional value and 156,083 total contracts, ETH trades at $2,052 against a max pain level of $2,075. Its put-to-call ratio of 0.72 points to heavier downside hedging than BTC’s.

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Ethereum Expiring Options. Source: Deribit

“Yesterday, the whale closed out the two positions on the right side… The whale entered the position at 66K and closed it out above 68K — this trade was a resounding success. Starting late last night, a whale of similar size began buying put options again, with over 2,000 contracts expiring today, targeting a price below 66K,” the analysts stated.

What Comes Next

Options settle at 08:00 UTC on Deribit. The hours leading up to that window typically generate the sharpest gamma hedging activity, pulling prices toward max pain.

For BTC, that means a potential drift toward $68,000 if bulls hold ground, or a break below $66,000 if the whale’s put bet plays out.

The post Whale Turns Bearish Ahead of $2 Billion Bitcoin and Ethereum Options Expiry appeared first on BeInCrypto.

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Bitcoin Supply in Profit and Loss Closer to 2022 Bear Market Levels

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Bitcoin Supply in Profit and Loss Closer to 2022 Bear Market Levels

The amount of Bitcoin supply in profit and loss is now getting closer to levels typical of a bear market, according to a CryptoQuant analyst.

There are currently about 11.2 million Bitcoin (BTC) in profit. The previous bear market recorded 9 million BTC in profit at its lowest point, CryptoQuant analyst “Darkfost” said Thursday. 

CryptoQuant data also shows there are about 8.2 million Bitcoin at a loss, with Glassnode data confirming it’s at levels not seen since late 2022. 

“This is quite significant, considering that during the last bear market this figure reached about 10.6 million BTC,” Darkfost said. 

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Analysts have been debating whether Bitcoin has further to fall this year amid growing global turmoil. Bitcoin metrics that show a movement toward previous cycle lows could suggest that a market bottom is getting closer. 

“This suggests that the market is reaching a notable level of undervaluation, comparable to the conditions observed during the previous bear market,” the analyst added. 

Bitcoin in profit and loss at bear market lows. Source: CryptoQuant 

Analyst sees increasing market stress, not undervaluation 

However, Andri Fauzan Adziima, research lead at the Bitrue exchange, argued the data signals “increasing market stress, not immediate undervaluation.”

True capitulation bottoms saw deeper pain, he told Cointelegraph. The supply in loss in 2022 was greater than 50% and the supply in profit was around 45% or lower, while metrics such as net unrealized profit/loss (NUPL) and market value to realized value ratio (MVRV) were at “extremes.”

“Current data points to early/mid-bear transition (potential structural bottom near $55,000), with more downside or consolidation likely before a full reset.”

Related: Bitcoin’s drawdown is ‘less dramatic’ this cycle, Fidelity says

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Data also shows Bitcoin has declined by about 52% from its all-time high this cycle, much less than previous bear markets, which saw 77% to 84% drawdowns from their cycle highs. 

Strong dollar hampering recovery 

Bitcoin author Timothy Peterson commented on X that Bitcoin “tends to struggle when the dollar is strong, and the Chinese yuan is weak.”

He added that this was due to tighter global liquidity, with higher dollar yields attracting capital into cash and bonds and cautious investor sentiment as China eases policy.

That only changes when US interest rates fall and “dollar yield loses its attractiveness,” which is not likely until the second half of 2026 or more likely 2027, he said. 

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The US dollar index (DXY) has gained about 5% over the past two months, according to TradingView. 

DXY has strengthened since late January. Source: TradingView

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