On October 31, a divided panel of the U.S. Court of Appeals for the 10th Circuit affirmed a district court’s judgment that Federal Reserve Banks were not required to grant master account access to every eligible institution. The case arose after a Wyoming-chartered bank was denied a master account by the Federal Reserve Bank of Kansas City due to concerns about its crypto-focused business model. The bank sued, arguing that federal law mandated approval for all eligible applicants and that the denial violated statutory and constitutional provisions. The district court rejected all the bank’s claims and entered summary judgment in favor of the defendants.

On appeal, the 10th Circuit reviewed the district court’s grant of summary judgment de novo. The plaintiff argued that Section 248a(c)(2) of the DIDMCA, which states that all Reserve Bank services “covered by the fee schedule shall be available to nonmember depository institutions,” requiring Federal Reserve Banks to provide master account access to all eligible institutions. The panel disagreed, holding that Section 342 of the Federal Reserve Act (FRA) was the controlling provision and that its permissive language — “may receive” — did not create a mandatory entitlement to a master account. The majority also noted that Section 248a of the DIDMCA addresses the pricing of Fed services, not master account access. The court pointed to 12 USC § 248c(b)(1)(B) (i.e., the Toomey Amendment), which requires the Fed to report on master account application approvals and rejections, confirming that Federal Reserve Banks may deny applications from eligible institutions.

The court also addressed the plaintiff’s claim under the APA, concluding lack of subject-matter jurisdiction because final agency action is required for APA review. The court explained that the Fed’s no-concerns communication regarding the denial did not constitute final agency action because it did not determine rights or obligations or have legal consequences — criteria required to establish the finality of an agency’s action. The court further held that the Mandamus Act was only available to compel nondiscretionary acts and, given the facts of the case, mandamus relief was precluded.

One judge dissented, arguing that the majority’s interpretation gave the Federal Reserve Banks significant unreviewable discretion and that the DIDMCA mandates access to master accounts via its use of the term “shall.” The dissent explained that the majority did not employ the “best reading” of the statute, and that contrary to the majority’s interpretation, the Toomey Amendment was intended only to increase transparency regarding application outcomes.