Fed Considering Payment-Only Master Accounts for Crypto Banks

All federally chartered banks have master accounts with the Fed that provide access to various financial services, such as settling transactions and managing reserves. The accounts are essential for institutions to participate in the U.S. payment system.

Crypto firms have long sought access to master accounts but have been denied by the Fed board. Under the new proposal, announced Tuesday by Fed Governor Christopher Waller at a conference in Washington, crypto institutions could establish new “skinny” master accounts that would give them access to the Fed payment rails on a “streamlined timeline,” but exclude access to the full suite of benefits.

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“As you all know, we are well into a technology-driven revolution in payments, and I am here to say that the Federal Reserve intends to be an active part of that revolution.” Waller said in prepared remarks.

“I have asked Federal Reserve staff to explore the idea of what I am calling a ‘payment account,’” he announced. “This payment account concept would be targeted to provide basic Federal Reserve payment services to legally eligible institutions that right now conduct payment services primarily through a third-party bank that has a full-fledged master account. There are many eligible firms engaged in substantial payments activities that may not want or need all the bells and whistles of a master account, or access to the full suite of Federal Reserve financial services.”

The excluded services could include payment of interest on account balances and overdraft privileges. The accounts might also impose caps on balances to control for “various risks to the Federal Reserve and the payment system,” Waller said.

The Fed proposal comes as crypto firms have begun applying to the Office of Comptroller of the Currency (OCC) for national bank charters in the wake of enacted of the GENIUS Act establishing federal rules of issuing stablecoins.

Waller’s speech also follows by one day remarks by OCC head Jonathan Gould aimed at soothing concerns among bankers that the spread of payment stablecoins could prompt an outflow of deposits from traditional financial institutions undermining liquidity in the credit market.

Some crypto firms so expressed caution in response to Waller’s announcement. In comments posted on X comments to Decrypt, Caitlin Long, founder of Wyoming-charted crypto bank Custodia, noted that Waller specified the Fed’s new program would apply to “legally eligible entities” if enacted, and may not be open to all types of crypto firms.

“The OCC trust charter route solves the state-by-state money transmitter licensing problem, but trust companies are prohibited by law from taking deposits (and Fedwire *moves deposits*),” she wrote. “The key words in Waller’s speech are *legally eligibile*–the Fed has not opined on legal eligibility for trust companies to move *deposits* when they are legally prohibited from taking *deposits*”