The Federal Reserve has published an updated proposal for a “skinny master account” that would grant fintech and cryptocurrency firms direct access to its payment rails, including Fedwire and the FedNow service, without needing a full bank charter. The move, released Wednesday, coincides with a new executive order from President Donald Trump directing federal agencies to integrate digital assets more deeply into existing payment networks and to review regulations that hinder fintech partnerships with banks.
The Fed’s proposal builds on an initial request for information issued in December 2025, outlining how non-bank institutions could settle payments, hold limited reserve balances, and process transactions through Fed infrastructure. Unlike traditional master accounts available to FDIC-insured banks, these “payment accounts” would not provide interest on reserves, access to the discount window, or intraday Fed credit. Instead, they offer a narrower path for crypto exchanges, stablecoin issuers, and payment processors to bypass intermediary banks—a critical vulnerability exposed when Silvergate and Signature Bank collapsed in 2023.
Trump’s executive order, signed May 19, adds political momentum. It requires the Fed to submit a comprehensive review of its payment access framework within 120 days and to establish transparent application procedures within 90 days. While the order cannot legally compel the central bank to act, it signals a clear institutional priority to open the settlement system. Fed Governor Christopher Waller has indicated such accounts could be operational by late 2026.
The industry already has a test case. In March, the Kansas City Federal Reserve Bank approved a limited-purpose master account for Kraken Financial, the exchange’s Wyoming-chartered banking subsidiary. That made Kraken the first crypto company to gain direct access to Fedwire, eliminating its reliance on correspondent banks for real-time gross settlement. Though the account carries no interest or credit backstops, it gives Kraken settlement independence—a significant operational advantage for institutional trading.
Stablecoin issuers like Circle (USDC) and Ripple, which has applied for its own master account to support its RLUSD stablecoin, are among the most immediate potential beneficiaries. Direct Fed access would allow them to move dollar reserves faster and more predictably during high-redemption periods, strengthening stability.
However, the banking industry has pushed back forcefully. The Bank Policy Institute, representing JPMorgan, Bank of America, and others, argues that even limited access for non-banks introduces liquidity and money-laundering risks. Fed Governor Michael Barr dissented from the initial proposal, citing insufficient safeguards. Critics warn that funds migrating from insured bank deposits to uninsured Fed settlement accounts could increase deposit volatility and amplify stress events. Yet the competitive dimension is also inescapable: exchanges currently pay intermediary banks for dollar settlement, a business model that direct access could disrupt.
The Fed’s design attempts to thread the needle—narrow accounts, strict eligibility, and no safety-net equivalence with traditional banks. With Kraken’s live experiment, the ongoing public comment period, and the White House’s backing, the debate over who gets to settle dollars inside the Federal Reserve system is shifting from theory to practice.
