American fintech trade groups, including the American Fintech Council, the Bank Policy Institute, The Clearing House Association, and the Financial Services Forum, have announced support for the Federal Reserve’s plans to offer certain non-bank firms master payment accounts with limited but direct access to U.S. payment rails.
However, banking groups have raised concerns about expanding the payment system to new market participants, especially crypto firms. The move indicates that the central bank may be inching towards its most significant shift on digital asset policy yet.
Fed Proposes ‘Skinny’ Master Accounts for Fintech and Crypto Firms
Currently, only federally chartered banks have direct access to the central bank’s master accounts, with non-banks facing intense scrutiny. Under the Fed’s three-tiered system, entities it considers high-risk, such as crypto platforms, face the toughest review.
The Fed is currently reviewing responses to its Request for Information on the “skinny master account” proposal before the Friday deadline. This payment account would give fintech firms limited access to the central bank’s infrastructure without granting them full banking privileges.
Fintech groups backing the proposal said that the current system requires payment firms to rely on sponsor banks to settle transactions, which they argue increases costs, slows settlement, and concentrates operational dependencies. They perceive the “skinny master account” as a way to provide direct settlement access without extending lending authority or deposit-taking functions, and eliminating reliance on traditional banks, which has been a long-standing hurdle for the sector.
“A well-designed payment account can expand competition and responsible innovation in payments without introducing new risk,” said Phil Goldfeder, CEO of the American Fintech Council, in a statement released on Monday.
In a letter, USDC stablecoin issuer Circle called the accounts an important step toward implementing the GENIUS Act’s vision. The company argued that the payment accounts would strengthen the domestic settlement infrastructure. Meanwhile, the Blockchain Payments Consortium described the move as long overdue, stating that the accounts would eliminate practices that concentrate risk around a handful of banks and are harmful to customers.
Speaking at the Fed’s first-ever payments innovation conference in October, Governor Christopher Waller said the central bank must “embrace disruption” as it navigates the rise of digital assets and decentralized finance. At the time, he proposed creating a limited version of the master account that would allow crypto and fintech firms direct but limited access to U.S. payment rails.
The planned skinny master accounts differ from traditional master accounts in several key areas. They would cap overnight balances, pay no interest, bar access to the Fed’s lending facility for banks and credit unions via the Discount Window, not allow daylight overdrafts, and limit access to final settlement systems such as Fedwire and FedNow. The central bank believes this setup will minimize risk to its balance sheet. Account holders would face an overnight balance cap of $500 million or 10% of total assets, whichever is lower.
Banking Lobby Warns Against Fed Access for ‘Uninsured’ Firms
However, banking groups are not thrilled at the prospect of nonbanks and crypto firms gaining access to the Fed’s payments infrastructure.
In a joint statement addressed to Benjamin McDonough, Deputy Secretary of the Board of Governors of the Federal Reserve System, last week, the Bank Policy Institute, Clearing House Association, and the Financial Services Forum warned that the proposed limited-access accounts represent a fundamental policy shift by enabling uninsured or lightly supervised institutions to connect directly with the Fed’s balance sheet.
They argue that even with the proposed restrictions, these payment accounts could still increase run risk and financial instability by supporting deposit-like activity outside the federal safety net. The letter explicitly flags stablecoin issuance as an example of activity that resembles deposit-taking but lacks deposit insurance, resolution regimes, and consolidated supervision.
While the Fed’s proposed limited master accounts do not mention crypto firms, banks argue that digital asset-linked institutions and stablecoin issuers are among the beneficiaries that would be allowed make direct settlements in central bank money.
