The U.S. Federal Reserve has proposed creating a new category of payment account that could give fintech and crypto firms limited access to the central bank’s payment infrastructure, marking a significant shift in the long-running debate over who can directly use the Fed’s payment rails.
The proposal would introduce a narrower version of the traditional Fed master account, allowing eligible firms to transfer money through the Federal Reserve system without granting them the full privileges available to commercial banks. The proposed accounts would not provide access to intraday credit, the Fed’s discount window, or interest on reserves deposited at the central bank.
The move reflects growing pressure from fintech and crypto companies seeking faster and cheaper access to the U.S. payments system. Fed master accounts, often described as bank accounts for financial institutions at the central bank, allow direct settlement of transactions through Federal Reserve payment networks. Supporters argue that broader access could reduce transaction costs and improve payment efficiency.
However, the proposal is likely to face scrutiny from traditional banking groups, which have consistently opposed granting such access to non-bank financial firms. Banks and some regulatory experts have warned that lightly regulated fintech and crypto entities could introduce operational, liquidity, and compliance risks into the financial system.
The debate has intensified as more digital asset and fintech firms attempt to secure banking-like charters that make them eligible for Fed accounts. Crypto exchange Kraken recently became the first crypto company to secure a Federal Reserve master account with certain restrictions after a multi-year application process. Other firms, including Ripple, Anchorage Digital, and money transfer company Wise, are also seeking similar access.
The proposal also revealed divisions within the Federal Reserve itself. Fed Governor Michael Barr dissented, arguing that the framework lacked adequate safeguards to prevent potential misuse for illicit financial activities. His opposition underscores ongoing concerns among regulators about anti-money laundering oversight and broader financial stability issues linked to digital asset firms.
The timing of the proposal is notable. It came just a day after President Donald Trump signed an executive order directing the Federal Reserve to review its policies surrounding payment accounts and consider expanding access to the payment system. The administration’s stance signals increasing political support for opening financial infrastructure to nontraditional financial institutions.
Despite the proposed changes, the Federal Reserve clarified that the framework would not alter the legal eligibility requirements for payment accounts. Only depository institutions would remain qualified to apply, while final approval authority would continue to rest with regional Federal Reserve banks. The central bank also said it has asked regional Fed banks to temporarily pause decisions on pending applications from nontraditional firms to ensure a uniform approach during the review process.
The proposal could reshape the competitive landscape in financial services by enabling fintech and crypto companies to interact more directly with the U.S. payments system, potentially reducing their reliance on intermediary banks. At the same time, it raises fresh questions about regulation, oversight, and the evolving role of non-bank institutions within the broader financial system.
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