GOP Lawmaker Says Fed Revoked Master Account for FinTech Reserve Trust

Pat Toomey, crypto, trading

U.S. Sen. Pat Toomey wants answers on why the Federal Reserve Bank of Kansas City, he says, revoked a master account for the FinTech Reserve Trust, Reuters wrote Thursday (June 9).

The master account gives Colorado-based Reserve Trust access to the Fed’s payments services, which Reuters said is a rare and sought-after privilege for a FinTech.

Toomey, R-Pa., writing to Kansas City Fed President Esther George, said he learned through an unspecified manner that the account was revoked.

Toomey, according to the report, said this raises questions as to the Fed’s process for approving master accounts. Some FinTech and crypto firms have sought access to these services, which are usually reserved for traditional banks.

See also: Federal Reserve Proposes US Central Bank Payment System Changes

The Fed has reportedly been looking at redoing the application process. In March, it said it was looking at a tiered review process, with lighter scrutiny to federally insured institutions and closer examination of uninsured firms and companies not under the supervision of bank regulators.

The Reserve Trust application was rejected in 2017, though granted in 2018 after the Fed said the company had shifted its business model. The decision was mired in controversy, though, because former Fed Governor Sarah Bloom Raskin, who was on Reserve Trust’s board,  reportedly personally called George about the firm’s application in 2017, according to Toomey.

Raskin, when she was under review for another Fed job under President Joe Biden recently, said she’d acted ethically in that case.

See also: Sarah Bloom Raskin Withdraws as Biden’s Pick for Top Fed Banking Regulator

PYMNTS wrote about the controversy surrounding Raskin and Reserve Trust. Raskin ultimately withdrew from consideration for the top Fed position because too many lawmakers had declined to back her, particularly Democratic Sen. Joe Manchin, who said he couldn’t support her over her climate change views.

Biden’s next nominee, Michael Barr, seems to be getting closer to approval. Barr, a law professor, has received no opposition from Democrats in a committee vote this week, and got five Republican votes of support.

See also: Senate Panel OKs Michael Barr as Fed’s Head of Bank Regulation