Federal Reserve Proposes Limited Access to Payment Systems for Fintechs and Crypto Firms

The Federal Reserve has taken a significant step towards promoting innovation in the financial sector by proposing a new type of account called 'skinny master accounts' or 'payment accounts'.

These accounts would allow non-bank institutions, including fintech and crypto firms, to access the Fed's payment systems through Fedwire and FedNow, two systems that move money between financial institutions in the US.

The proposal aims to provide direct system access for eligible non-bank institutions, but with certain restrictions. For example, no interest would be paid on balances, and there would be stringent caps on how much money can sit in the account overnight.

One of the key concerns is that these accounts would not include access to FedACH, the automated clearinghouse system that processes direct deposits, bill payments, and other batch transactions. Fintech trade groups have already flagged this as a meaningful limitation, since ACH rails handle an enormous share of everyday consumer and business payments.

However, for companies like stablecoin issuers and payment-focused crypto firms, direct Fed access could be transformative. They would be able to settle transactions on FedNow in real time without a banking partner taking a cut, improving their unit economics significantly.