The US Federal Reserve is seeking public comment on a proposed “settlement account” called the “Skinny Master Account,” which has attracted attention from fintech and crypto companies because it would give it access to the central bank without the usual approvals.
“These new payment accounts will support innovation while keeping our payments system secure,” Federal Reserve President Christopher Waller said Friday. Waller recommended in October that the Fed consider the idea of introducing clearing accounts to clear and settle certain trading activities of eligible financial institutions.
Waller added that the Fed is introducing the payment account feature to reflect “rapid developments” in the payments industry that have brought “innovative approaches to banking” and new changes in business models.
“This adjustment has the potential to reduce risk to the payment system and, as a result, requests for payment accounts will be subject to streamlined review by the public.”
Not all Fed officials agreed with the decision to seek public input, with Governor Michael Barr arguing that there could be risks if safeguards against money laundering and terrorist financing are not clearly defined, especially for institutions that the Fed does not directly oversee.
Several payments-focused crypto companies may be looking to connect to the Fed’s banking rails, potentially strengthening the bridge between crypto and traditional banking. Some of the largest U.S.-based cryptocurrency payment companies include Circle, Coinbase, Kraken, and Block, Inc.
sauce: federal reserve system
The addition of crypto companies to the Fed’s banking system would be a major shift for the industry. Cryptocurrency companies alleged last year that the Biden administration deliberately sought to cut them off from banking services in an effort to stifle the industry in an operation crypto backers dubbed “Operation Chokepoint 2.0.”
Waller noted that the Fed is already experimenting with blockchain-based payments technology to modernize the U.S. payments system.
Cryptocurrencies are not given the same privileges
However, payment platforms that are granted payment accounts will not receive the same privileges as large banks and Wall Street institutions that currently hold master accounts.
Unlike a master account, the proposed payment account would not earn interest, would have access to Fed credit, and would be subject to restrictions such as balance limits, among other things.
The comment period to provide feedback on payment account plans ends 45 days after publication in the Federal Register. Waller said last month that the payment account feature is expected to go live in the fourth quarter of 2026.