The Federal Reserve has opened a portal for public feedback on a proposal that would give fintech and cryptocurrency companies limited access to the U.S. central bank’s payments infrastructure through “skinny accounts.”
According to the proposal released The Federal Reserve is discussing with policymakers on Friday an initiative for a new category of payment accounts that would allow some nonbank financial institutions to settle and clear trades directly through the Fed’s systems.
“These new payment accounts will support innovation while maintaining the security of our payments system,” said Federal Reserve Board Director Christopher J. Waller.
Fed proposes designated accounts for crypto companies to access master accounts
A central bank board memo shared with the press suggests that eligible financial institutions will be able to open so-called “skinny” accounts for payment services through the Fed master account. Currently, fintech and crypto companies rely on intermediary banks, which already hold master accounts at the Federal Reserve Bank, to process transactions.
The central bank said the proposed payment accounts would not earn interest, would not have access to credit facilities and would be limited in size to reduce risks to the financial system.
Under the proposal, the Fed would consider capping overnight balances at the lesser of $500 million or 10% of a financial institution’s total assets. Because the account is limited to the account holder’s own transactions, companies will be prohibited from issuing correspondent banking services or settling payments on behalf of third parties.
Additionally, the Reserve Bank will retain discretion to impose limits and risk controls on a case-by-case basis, alongside other safeguards such as account agreement terms, formal certification, and periodic reporting requirements.
Economists discuss cryptocurrency safeguards and oversight
Some policymakers, like Gov. Michael Barr, do not support the proposal in its current form. Barr, a Democratic appointee who previously served as the Fed’s top regulator, objected to the request for information, saying it “lacked sufficient detail about protections against financial crimes.”
Some policymakers, like Gov. Michael Barr, do not support the proposal in its current form. Barr, a former Democratic Fed regulator during the Obama administration, objected to the request for information because it “lacked sufficient detail regarding protections against financial crimes.”
A former assistant secretary of the Treasury for financial institutions warned that the proposal is “not specific enough about safeguards to protect accounts used for money laundering and terrorist financing by institutions not supervised by the Fed.”
As Cryptopolitan reported last week, the board scrapped The 2023 rules were replaced with a new framework that gives state member banks more flexibility to implement innovative tools. The policy required state member banks to comply with activity restrictions similar to those imposed by other federal regulators.
After months of consultation and public opinion, the Board ultimately approved its repeal, concluding that changes in the financial system and the Board’s own understanding made the rule invalid.
