On Feb. 26, 2019, Wyoming's governor signed House Bill 741. The bill created a new kind of bank, the special purpose depository institution, or SPDI. An SPDI can hold digital assets, must keep reserves equal to its assets and is barred from lending6. Wyoming signed a second law on Feb. 26, 2019, setting out property rights for digital assets34.
Caitlin Long spearheaded the state task force behind those bills, CoinDesk reported in a 2019 profile5. She grew up in Wyoming, and her Wall Street career ran 22 years. In 2026, the banks that law created still depend on the Federal Reserve for direct access to dollar payments13.
Did Wyoming build a bank the Fed would let in?
The law and the woman behind it
Long's push began with a blocked gift. In 2017 she tried to donate bitcoin to the University of Wyoming, and the state's money transmitter law blocked it, CoinDesk wrote5. She then worked with legislators on a run of bills.
The first came in 2018. House Bill 70 exempted certain open blockchain tokens from state securities law, and the governor signed it on March 10, 20182. Its sponsor, state Rep. Tyler Lindholm, told Decrypt the idea came from Long on an October 2017 call4.
“And Caitlin mentioned, well, what if we handled this whole ICO situation, and differentiated it and talked about utility tokens versus security tokens in law,” Lindholm said4.
By 2019 the task force had passed 13 bills, "far more than any other U.S. state can boast," Jessica Klein wrote in CoinDesk5. Long's task force seat was unpaid. She also owned bitcoin and invested in Kraken, the main sponsor of a 2019 event she hosted. Some saw her role as ethically questionable, CoinDesk reported.
Both sides, in their own words
Should a state be able to charter a bank the Fed can shut out?
“The Wyoming Legislature reached an agreement with the Fed in December 2018 to recognize SPDI banks, but the Fed broke that agreement”
“The firm's novel business model and proposed focus on crypto-assets presented significant safety and soundness risks”
The first SPDI charter
Wyoming's banking board granted the first SPDI charter on Sept. 16, 20206. The charter went to Kraken, the crypto exchange. Chris Land, the Wyoming Division of Banking's general counsel, said it was the state's first new bank charter since 2006.
Long had her own SPDI application in6. She told CoinDesk the charter would push the industry toward proof of reserves.
“We have zero insight into whether the service providers are solvent or not and they’re not even audited in most cases,” Long said6.
Her warning came 26 months before FTX filed for bankruptcy on Nov. 11, 2022, a date she later cited to legislators11.
The Fed's answer
To move dollars directly, a bank needs a master account at a Federal Reserve Bank1213. Custodia, the bank Long runs as chief executive, asked the Kansas City Fed for one on Oct. 29, 2020811. Kraken's bank asked on Oct. 6, 2020.
The Fed classed both as Tier 38. Its account access guidelines sort applicants into three tiers10. “Institutions in a higher tier generally will be subjected to greater due diligence and scrutiny than institutions in a lower tier,” the Federal Reserve Board's database guide says.
On Jan. 27, 2023, the Federal Reserve Board denied Custodia's bid to join the Fed system7. “The firm's novel business model and proposed focus on crypto-assets presented significant safety and soundness risks,” the Federal Reserve Board said. “The Board has previously made clear that such crypto activities are highly likely to be inconsistent with safe and sound banking practices.” The Fed's own database shows Custodia's master account request rejected on Jan. 27, 2023, 820 days after it was filed8.
What the Fed's data show
A Fed database lists the access requests filed after Dec. 23, 2022, plus those still pending then15. The CryptoLately.com Desk counted them by tier.
Tier 1 applicants, mostly federally insured banks and credit unions, filed 117 requests8. The Fed approved 94 of them. Their median wait, request to approval, was 53.5 days.
Applicants in Tier 3 filed 48 requests. The Fed approved 3 and rejected 48. Twenty were withdrawn and 21 still wait.
The Fed approved 94 of 117 Tier 1 requests and 3 of 48 from Tier 3, as of Aug. 31, 2026
Requests for Fed accounts and services, by outcome and by the tier the Fed first assigned
- Tier 1
- Tier 2
- Tier 3, includes SPDIs
- Height: Requests
Read the chart as a table
| Item | Tier 1 | Tier 2 | Tier 3, includes SPDIs |
|---|---|---|---|
| Approved | 94 requests | 0 requests | 3 requests |
| Pending | 15 requests | 4 requests | 21 requests |
| Withdrawn | 7 requests | 3 requests | 20 requests |
| Rejected | 1 request | 0 requests | 4 requests |
Kraken's approval came after 1,940 days, on Jan. 28, 2026, by the Fed's date8. Kraken announced it on March 4, 202613.
The Fed's list of current account holders shows the same narrowing9. Among institutions on that list today, five federally uninsured ones gained access in 2020. In 2023 and in 2025 the count was 0, and in 2026 it was 2. Insured banks gained access 28 times in 2023 alone.
Of Fed account holders on Aug. 31, 2026, 5 uninsured ones got access in 2020, 2 in 2026
Institutions with Fed account access, by the year access began and by federal deposit insurance
- FDIC-insured
- Federally uninsured
- Height: Institutions
Read the chart as a table
| Item | FDIC-insured | Federally uninsured |
|---|---|---|
| 2018 | 11 institutions | 3 institutions |
| 2019 | 9 institutions | 3 institutions |
| 2020 | 13 institutions | 5 institutions |
| 2021 | 14 institutions | 0 institutions |
| 2022 | 11 institutions | 2 institutions |
| 2023 | 28 institutions | 0 institutions |
| 2024 | 16 institutions | 1 institution |
| 2025 | 8 institutions | 0 institutions |
| 2026 | 12 institutions | 2 institutions |
Custodia in court
Lawyers for Custodia sued the Fed in federal court in Wyoming12. On Oct. 31, 2025, a Tenth Circuit panel ruled 2 to 1 for the Fed. Senior Judge David M. Ebel wrote that federal law “grants Federal Reserve Banks discretion to reject master account access requests from eligible entities”.
Judge Timothy M. Tymkovich dissented16. “By claiming unreviewable discretion over access to the nation’s financial system, the Fed has gone too far,” he wrote12.
On March 13, 2026, the full court declined to rehear the case, with Tymkovich among three judges who voted to rehear it17. Custodia filed a new request on Feb. 6, 2026, through the Dallas Fed, and withdrew it on May 21, 20268.
The case for the Wyoming model
Long told Wyoming legislators on May 21, 2024 that the Fed had changed the deal. “The Wyoming Legislature reached an agreement with the Fed in December 2018 to recognize SPDI banks, but the Fed broke that agreement,” Caitlin Long testified11.
Lawsuit discovery, Long said, showed the Fed drafted its new guidelines "largely in reaction to Wyoming’s SPDI bank initiative"11. An internal Fed document, she said, read "No for Tier 3".
Kraken's approval supports part of her case. “Though approval took five and a half years, the Fed’s actions—at long last—validate Wyoming’s thoughtful regulatory framework,” Sen. Cynthia Lummis said14.
The case for the Fed
Risk is the core of the Federal Reserve Board's case. Its Jan. 27, 2023 release said Custodia's risk framework was “insufficient to address concerns regarding the heightened risks associated with its proposed crypto activities”7. Ebel's majority framed the stakes in its first lines: the Fed protects "the safety and stability of our financial system"12.
Those data cut both ways. The Fed has formally rejected 4 Tier 3 requests8. Tier 3 applicants withdrew 20.
What to watch
Watch the Fed's pending list. Twenty-one Tier 3 requests wait in data current as of Aug. 31, 2026, Commercium Financial and N3XT among the Wyoming ones8. Each decision will show whether Kraken's account was the first of many or a single case.
Sources
- Wyoming Legislature, "HB0074, Special purpose depository institutions," 2019 General Session, signed Feb. 26, 2019, https://wyoleg.gov/LsoService/api/BillInformation/2019/HB0074?quickView=False
- Wyoming Legislature, "HB0070, Open blockchain tokens-exemptions," 2018 Budget Session, signed March 10, 2018, https://wyoleg.gov/LsoService/api/BillInformation/2018/HB0070?quickView=False
- Wyoming Legislature, "SF0125, Digital assets-existing law," 2019 General Session, signed Feb. 26, 2019, https://wyoleg.gov/LsoService/api/BillInformation/2019/SF0125?quickView=False
- Guillermo Jimenez, "Meet the Wyoming lawman hellbent on bringing blockchain to the Cowboy State," Decrypt, March 28, 2019, https://decrypt.co/6152/meet-wyoming-lawman-hellbent-bringing-blockchain-cowboy-state
- Jessica Klein, "Most Influential 2019: Caitlin Long, The Bridge," CoinDesk, Internet Archive copy captured Dec. 4, 2020, https://web.archive.org/web/20201204115555/https://www.coindesk.com/most-influential/2019/caitlin-long/
- Nate DiCamillo, "Kraken Becomes First Crypto Exchange to Charter a US Bank," CoinDesk, Sept. 16, 2020, https://www.coindesk.com/business/2020/09/16/kraken-becomes-first-crypto-exchange-to-charter-a-us-bank
- Federal Reserve Board, "Federal Reserve Board announces denial of application by Custodia Bank, Inc. to become a member of the Federal Reserve System," Jan. 27, 2023, https://www.federalreserve.gov/newsevents/pressreleases/orders20230127a.htm
- Federal Reserve Board, "Master Account and Services Database: Access Requests (requestor-data.csv)," data current as of Aug. 31, 2026, read Oct. 13, 2026, https://www.federalreserve.gov/paymentsystems/account-and-access-disclosure/requestor-data.csv
- Federal Reserve Board, "Master Account and Services Database: Existing Access (holder-data.csv)," data current as of Aug. 31, 2026, read Oct. 13, 2026, https://www.federalreserve.gov/paymentsystems/account-and-access-disclosure/holder-data.csv
- Federal Reserve Board, "Master Account and Services Database: Frequently Asked Questions," read Oct. 13, 2026, https://www.federalreserve.gov/paymentsystems/master-account-and-services-database-faq.htm
- Caitlin Long, "Testimony of Caitlin Long, CEO of Custodia Bank," Wyoming Legislature Select Committee on Blockchain, Financial Technology and Digital Innovation Technology, May 21, 2024, https://wyoleg.gov/InterimCommittee/2024/S19-20240520SelectCommitteeTestimonyMay212024--ASSUBMITTED.pdf
- David M. Ebel, "Custodia Bank, Inc. v. Federal Reserve Board of Governors, No. 24-8024," U.S. Court of Appeals for the Tenth Circuit, Oct. 31, 2025, https://www.ca10.uscourts.gov/sites/ca10/files/opinions/010111327582.pdf
- Payward, "Kraken becomes first digital asset bank to receive a Federal Reserve master account," March 4, 2026, https://www.payward.com/press-release/kraken-first-digital-asset-bank-federal-reserve-master-account
- Office of Senator Cynthia Lummis, "Lummis Annouces Historic Approval of Federal Reserve Master Account for Kraken," March 4, 2026, https://www.lummis.senate.gov/press-releases/lummis-annouces-historic-approval-of-federal-reserve-master-account-for-kraken/
- Federal Reserve Board, "Master Account and Services Database: About," data current as of Aug. 31, 2026, read Oct. 13, 2026, https://www.federalreserve.gov/paymentsystems/master-account-and-services-database-about.htm
- U.S. Court of Appeals for the Tenth Circuit, "Judges," read Oct. 13, 2026, https://www.ca10.uscourts.gov/judges
- U.S. Court of Appeals for the Tenth Circuit, "Custodia Bank, Inc. v. Federal Reserve Board of Governors, No. 24-8024, order denying rehearing en banc," March 13, 2026, https://www.ca10.uscourts.gov/sites/ca10/files/opinions/010111400884.pdf