Fed Advances 'Skinny' Master Account Plan to Integrate Crypto Banks into Payment System
The Federal Reserve is moving forward with a plan to establish a 'skinny' master account, now renamed as a 'payment account,' specifically designed for crypto and innovation-focused banks. This initiative aims to grant these banks access to Fed payment rails on a national scale while bypassing traditional master account rules.
Payment accounts under this plan would allow crypto banks to use Fed payment infrastructure but would not earn interest, provide Fed credit, and would likely have balance caps to mitigate risks. The approach marks a major policy shift for the Fed, which previously rejected master accounts for crypto banks over stability concerns.
The concept of a skinny master account was first introduced by Fed Governor Christopher J. Waller in October, and the Fed is now actively advancing the proposal. A public comment period of 45 days has been opened to gather feedback on the plan.
State-licensed crypto banks, such as Custodia, have long sought access to master accounts to operate nationally, and this plan could transform that landscape. Leadership changes at the Fed are also on the horizon, with several potential chair candidates, including Waller, aligned with the current administration's agenda, while Chair Jerome Powell’s independence remains noted.
Waller’s advocacy for the skinny master account underlines a notable shift in the Fed's strategy towards digital assets and innovation in the banking sector.
