Custodia accuses the Federal Reserve Board of Governors and the Federal Reserve Bank of Kansas City of unreasonably reviewing his application for 19 months and refusing to rule.

"A master account would have allowed Custodia to work directly with the Fed instead of going through intermediaries. Having a master account would have allowed Custodia to drastically reduce costs and offer customers additional products and features. The Fed has no clear standards for reviewing applications, allowing them to operate in complete secrecy whenever and however they wish," the lawsuit says.

As Custodia notes, according to the Fed's own records, it typically takes 5-7 business days to review applications for a basic account. In addition, the regulator has "clearly exceeded the one-year regulatory deadline," the cryptobank claims.

Custodia received an American Banking Association banking code in February, which is one of the key steps for opening an account with the Fed. According to the American Banking Association's website, the banking code is only issued to licensed financial institutions that qualify to open an account with the Fed.

"There is a black box bureaucratic process in place with no clear rules or standards for reviewing applications, no clear lines of accountability or responsibility between the Board of Directors and the Federal Reserve Bank of Kansas City and no clear understanding of when the Custodia application story will come to an end," the suit says.

Cryptobank is asking for an expedited hearing and to order the Fed to issue a decision within 30 days.