Federal Reserve Floats "Skinny" Payment Accounts, Reviving Debate Over Crypto Access

The U.S. Federal Reserve on Wednesday advanced plans for a new class of limited payment accounts that would provide a pared-back version of the master account services typically reserved for banks, and opened a 60-day public comment period on the latest proposal. The Fed said the accounts could help firms with a range of business models clear and settle payments more quickly and at lower cost, while stopping short of full master account status. The concept follows a December request for information that included an initial 45-day comment window, and the central bank said the current approach is "substantially similar" to the prototype outlined in that earlier effort. The proposal addresses a long-running priority for parts of the crypto industry seeking more direct access to the Fed's payment rails. The earlier version of the concept was widely dubbed "skinny" accounts. Under the Fed's description, payment account holders would not have access to intraday credit or the discount window, would not earn interest on balances held at a Reserve Bank, and would be limited to payment services that include automated controls designed to prevent overdrafts. The Fed also said it revised elements of the framework after receiving feedback since December. In particular, closing balance limits would be tied to an institution's expected payment activity, and the maximum allowable closing balance would be increased. In March, Kraken became the first crypto bank to receive a limited master account, though the approval came from the Federal Reserve Bank of Kansas City rather than through a board-level rule in Washington. The Fed said it has now asked regional Reserve Banks to pause consideration of certain applications while it completes the rulemaking process. The development follows a related executive order issued a day earlier by President Donald Trump, directing the Fed to review how it grants uninsured depository institutions and nonbank financial firms access to payment accounts and services. The order also called for an examination of the 12 regional Fed banks' ability to establish payment accounts independently of the Fed's Board of Governors.