federal reserve new payment account for fintech

The US Federal Reserve has opened a public consultation on a proposed new type of central bank account designed to expand access to its payment systems for fintech and cryptocurrency companies. The initiative, referred to as a “payment account” or informally as a “skinny master account,” aims to support innovation in the rapidly evolving payments industry while maintaining the safety and stability of the financial system.

According to Federal Reserve Governor Christopher Waller, the new payment accounts would allow eligible financial institutions to clear and settle certain transactions directly through the Fed, without requiring the full range of approvals associated with traditional master accounts. Speaking on Friday, Waller emphasized that the proposal reflects “rapid developments” in payment technologies and new banking business models that demand more tailored regulatory approaches.

Waller first suggested exploring payment accounts in October, arguing that limiting access to specific payment functions could reduce systemic risk. He noted that a more customized framework may lead to a streamlined review process for applicants, as these accounts would carry fewer risks compared to full-service banking access.

However, the proposal has not received unanimous support within the Federal Reserve. Governor Michael Barr expressed concerns that granting access to institutions not directly supervised by the Fed could increase risks related to money laundering and terrorist financing, particularly if safeguards are not clearly defined from the outset.

If approved, the payment accounts could open the door for major crypto-focused payment companies such as Circle, Coinbase, Kraken, and Block, Inc. to connect directly to the Fed’s payment infrastructure. Such a move would significantly strengthen the link between the crypto industry and the traditional banking system, marking a notable shift in regulatory posture.

This development would also represent a sharp contrast to complaints made by crypto firms in recent years. In 2024, several companies accused the Biden administration of attempting to restrict their access to banking services in what industry advocates labeled “Operation Chokepoint 2.0.”

Despite the potential benefits, payment accounts would come with strict limitations. Unlike master accounts held by large banks and Wall Street institutions, these accounts would not earn interest, would have no access to Federal Reserve credit facilities, and would be subject to balance caps and other restrictions.

Waller also highlighted that the Federal Reserve has already been experimenting with blockchain-based payment technologies as part of broader efforts to modernize the US payments system. The public comment period for the payment account proposal will remain open for 45 days following its publication in the Federal Register. If implemented as planned, the new payment account framework is expected to become operational in the fourth quarter of 2026.