Federal Reserve Seeks Input on Crypto-Friendly Account Types
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The US Federal Reserve is seeking public input on a proposed payment account, often referred to as a skinny master account, aimed at providing fintechs and crypto-focused firms limited access to the central bank's payments infrastructure under a tailored approval framework.
Fed Governor Christopher Waller stated that these new payment accounts would support innovation while maintaining the safety of the payments system. Waller's recommendation follows discussions in October about implementing payment accounts for eligible financial institutions to clear and settle certain transaction activities.
This new feature reflects the rapid developments in the payments industry, which have led to innovative banking approaches and changes in business models. The tailored approach could lower risks to the payment system and allow for streamlined reviews of requests for these accounts.
However, not all Fed officials agree with the decision, as Governor Michael Barr raised concerns about potential risks related to money laundering and terrorist financing, especially for institutions not directly supervised by the Fed.
Several prominent US-based crypto payment companies, including Circle, Coinbase, Kraken, and Block, Inc., could benefit from this initiative, potentially creating a stronger connection between crypto and traditional banking.
This move marks a significant change for the industry, especially after claims that the Biden administration attempted to cut off crypto firms from banking services, referred to as Operation Chokepoint 2.0.
Waller also mentioned that the Fed has been experimenting with blockchain-based payment technologies to modernize the US payment system. The proposed payment accounts will not have the same privileges as master accounts held by big banks and Wall Street institutions, as they will not earn interest, have access to Fed credit, and will face balance caps.
The comment period for feedback will close 45 days after publication in the Federal Register, and Waller expects the payment account feature to be operational by the fourth quarter of 2026.