The Federal Reserve Board has initiated a public comment period regarding a proposal to create new “payment accounts” tailored for legally eligible financial institutions, including a range of fintech and crypto firms. This initiative seeks to offer these institutions direct access to clearing and settlement services, marking a significant shift in how non-bank entities can interact with the Federal Reserve’s payment infrastructure.
The proposed “skinny master account” is designed for institutions with innovative business models that do not require the full suite of benefits available to traditional banks. This account would enable eligible firms to clear and settle payments through the Federal Reserve system while excluding access to intraday credit, discount window borrowing, and interest on account balances.
Fed’s Vision for a Modern Payment Landscape
The Federal Reserve has acknowledged the rapid evolution of the payments landscape, with an increasing number of financial firms seeking faster and more cost-effective methods for transferring funds. This trend has raised concerns regarding access for non-federally insured entities, leading to calls for enhanced risk controls and consistency across the Federal Reserve system.
According to the proposal, payment account holders would gain access to payment services equipped with automated controls to prevent overdrafts, emphasizing a risk-averse approach. The structure aims to ensure that eligibility rules for Federal Reserve accounts and services remain unchanged, while providing a clearer pathway for fintech and crypto firms to engage with the Federal Reserve’s payment ecosystem.
Implications for Tier 3 Access Institutions
The proposal is particularly relevant for fintech and crypto firms seeking closer integration with U.S. payment rails, many of which currently fall under Tier 3 of the Fed’s Account Access Guidelines. This tier includes institutions that necessitate more intensive supervisory or risk assessments. In light of this, the Federal Reserve has urged its Reserve Banks to temporarily halt decisions on access requests from Tier 3 institutions during the ongoing policy development process. This pause is intended to promote a more consistent application of standards across the Federal Reserve system.
Eleanor Terrett highlighted that the Fed’s request signifies a formal progression in Governor Christopher Waller’s initiative to implement payment accounts. This follows a prior public comment phase that concluded in February, indicating a responsive approach to stakeholder feedback.
The new payment account framework could empower firms to directly access settlement mechanisms, reducing reliance on intermediary banks. This direct access may facilitate faster settlement times and lower transaction costs. However, the Federal Reserve has underscored that any account holders must effectively manage associated risks, including those related to illicit finance and operational controls.
Public Comments and Future Developments
The newly proposed framework echoes a prototype outlined in the Board’s December 2025 request for information, with refinements made based on previous feedback, particularly regarding closing balance limits, which will now be contingent on an institution’s anticipated payment activity.
Importantly, payment account holders will not earn interest on balances held at a Reserve Bank and will lack access to the discount window, which is typically available under specific conditions to eligible depository institutions.
The comment period will remain open for 60 days following the proposal’s publication in the Federal Register, allowing stakeholders to influence the final structure of these accounts and the criteria by which Reserve Banks evaluate applications from eligible entities.
This proposal arrives as U.S. regulators continue to scrutinize the interactions of digital asset companies, fintech platforms, and non-bank financial institutions with traditional payment systems. The growing focus on master account access for firms engaged in stablecoins, crypto custody, and digital payments underscores the evolving regulatory landscape in the financial sector.
