USDFederal Reserve Floats “Skinny” Payment Accounts to Bridge Fintech and Crypto Access
Governor Waller pushes for a limited-access Fed account model
TL;DR:
- Fed Governor Christopher J. Waller proposes a new “payment account” framework for fintech and crypto innovators.
- The plan introduces “skinny master accounts” with no interest, no overdrafts, and capped balances.
- The initiative signals a potential end to crypto’s banking access struggles while balancing regulatory risk.
Federal Reserve Governor Christopher J. Waller revealed that the central bank is considering a new type of account designed specifically for payment innovators—fintechs, stablecoin operators, and crypto-linked firms that currently rely on traditional banks for access to the Fed’s infrastructure. Speaking on October 21 at the Payments Innovation Conference, Waller said he has instructed staff to explore what he calls a “payment account,” sometimes referred to as a “skinny master account.” The goal, he explained, is to modernize access to the central bank’s payment systems without fully opening the doors that have traditionally been reserved for commercial banks.
The proposed account would provide limited but direct access to Fed payment services while removing several privileges held by full master account holders. It would not pay interest on balances, offer no overdraft or daylight-credit facilities, and would likely cap account holdings to limit systemic risk. Institutions using such accounts would also be restricted from tapping the Fed’s discount window for emergency lending. Waller framed the plan as a way to “support those actively transforming the payment system” and ensure the Fed remains in step with the rapid pace of digital-payments innovation. “Payment innovation moves fast, and the Federal Reserve needs to keep up,” he said.
Under the current structure, only banks or bank-chartered institutions hold direct Fed master accounts, leaving crypto companies and non-bank fintechs dependent on intermediaries to access settlement services. The new proposal could loosen that dependency and allow compliant, legally eligible entities to connect to the Fed’s payment network more directly. While details remain under review, industry observers have labeled it a potential turning point for U.S. payment policy and for the crypto sector’s long-standing “de-banking” problem.
The plan follows several years of tension between the Fed and crypto-focused financial institutions seeking master-account access. Firms such as Custodia Bank—founded by former Wall Street executive Caitlin Long—have long argued that the Fed’s prior stance effectively locked out innovative payment models. Long praised Waller’s initiative, saying it recognizes “the terrible mistake the Fed made in blocking payments-only banks from Fed master accounts.” She also cautioned that some trust companies, particularly those that custody crypto assets but cannot accept deposits, may still face eligibility issues under the proposed structure.
Waller’s remarks also placed the initiative within a broader push by the central bank to study emerging technologies, including tokenization, smart contracts, and the use of artificial intelligence in payments. He said the Fed’s research aims to understand how these technologies could enhance its own systems and inform future policy. By exploring a leaner account framework, the central bank could encourage innovation while maintaining oversight and risk discipline—a balance regulators have struggled to strike amid the growth of digital finance.
The proposal remains conceptual, with no formal rule-making or eligibility criteria announced. Waller confirmed that the Fed will gather feedback from industry stakeholders before determining whether to move forward. The initiative arrives just months after the central bank ended its “novel activities” supervision program for crypto-related banking, integrating oversight into its broader supervisory framework. For many in the fintech and digital-asset sectors, the move suggests a subtle shift toward cooperation rather than exclusion. If adopted, “skinny” accounts could redefine how new-generation payment companies, from stablecoin issuers to blockchain-native processors, engage with the U.S. financial backbone—potentially reshaping the intersection between innovation and monetary infrastructure.
This article has been refined and enhanced by ChatGPT.
