Fed’s New Account Model Could Rewrite Crypto’s Banking Access—Here’s Why It Matters

The Federal Reserve just hinted at a rule change that could tear down the wall between crypto and traditional banking. No more begging for master accounts—this new framework might let digital asset firms plug directly into the U.S. payment system.

What's Actually Changing?

Forget the old gatekeeping. The Fed's proposed model ditches the one-size-fits-all approach. Instead of slamming the door, they're sketching tiers of access—think of it as a risk-based on-ramp. Stablecoin issuers? Custodians? They could get their own lane, bypassing the correspondent banking maze that adds cost and delay to every transaction.

Why TradFi Should Sweat

This isn't just about convenience—it's about competition. Direct Fed access cuts out the middleman banks that have been charging tolls on every crypto dollar move. It shrinks settlement times from days to minutes and could finally make on-chain finance feel, well, normal. Wall Street's old guard hates that—their lucrative plumbing business faces a bypass.

The Fine Print (And The Catch)

Don't break out the champagne yet. The Fed loves its 'robust risk management.' Expect capital buffers, compliance audits, and real-time monitoring that would make a quant blush. They'll greenlight firms that play by the new rules—and freeze out the cowboys. It's a classic move: regulate by inclusion, not just enforcement.

The Bottom Line

This is the Fed's quiet admission that crypto isn't going away. By building a supervised bridge, they're trying to tame the wild west without killing the gold rush. If it works, it legitimizes an entire industry overnight. If it fails? Another cynical finance jab: we'll just watch bankers collect fees while blaming 'regulatory uncertainty' for another decade.

Fed Weighs Limited-Use Accounts to Ease Strain on Payment Rails

The proposal reflects how changes in the payments industry have begun to strain the Federal Reserve’s long-standing account framework.

New business models, including payment-focused fintech firms and crypto companies, have sought direct access to the Fed’s payment rails without engaging in lending, deposit-taking, or other activities associated with full-service banks.

The Fed said the payment account is designed to meet those limited needs while reducing risks to the broader financial system.

Under the proposal, payment accounts would not earn interest, would not provide access to Federal Reserve credit facilities, and would be subject to balance caps.

The Fed is considering limits such as an overnight cap equal to the lesser of $500 million or 10% of an institution’s assets.

Account holders would also be prohibited from offering correspondent services or settling transactions on behalf of other institutions.

Use of the account would be restricted to clearing and settling the institution’s own payments, a design intended to lower supervisory and systemic risk and allow for a more streamlined review process than is required for full master accounts.

Federal Reserve Governor Christopher Waller said the proposed account structure could encourage innovation while maintaining the safety and efficiency of the payments system.

He described the request for information as an initial step toward modernizing central bank infrastructure, noting the Fed’s ongoing work with blockchain-based tools.

Waller first urged the Fed to explore payment accounts for clearing and settlement in October.

Fed proposes "payment accounts" granting stablecoin issuers direct Fed access without banks as Ripple and Anchorage Digital applications could see faster decisions.#Fed #Stablecoinhttps://t.co/RhCdQ7ZVaV

The Fed emphasized that the new model would not alter the legal eligibility requirements for access to Federal Reserve services.

Instead, it would create a narrower access point within the Fed’s existing single master account framework, which typically allows one master account per chartered institution, supplemented by informational subaccounts that do not hold separate balances.

After Years of Resistance, U.S. Bank Regulators Ease Crypto Restrictions

Not all Fed officials support the payment account proposal. Governor Michael Barr warned that expanding access without clearly defined safeguards could increase risks related to money laundering and terrorist financing, particularly for institutions the Fed does not directly supervise.

The MOVE follows years of controversy surrounding the Federal Reserve’s handling of crypto-related applications.

In 2023, the Fed adopted a policy that created a strong presumption against many crypto activities and denied Custodia Bank’s application for a master account after a 27-month review.

Custodia, a Wyoming-chartered special purpose depository institution, has argued that the denial violates the Monetary Control Act, which states that payment services “shall be available” to eligible institutions.

The bank escalated its legal fight this month, seeking an en banc review from the Tenth Circuit Court of Appeals after a divided panel upheld the Fed’s decision.

Custodia Bank petitions full appeals court to review Federal Reserve's master account denial, citing constitutional concerns and federal law violations.#Crypto #Bank #Fedhttps://t.co/KyM8MlA1WC

Since then, the regulatory posture has begun to shift. On December 8, the Federal Reserve withdrew its 2023 policy statement that effectively barred banks from most crypto activities.

Beyond the courtroom, federal regulators have begun dismantling other barriers facing crypto firms, including addressing inappropriate restrictions on lawful businesses and approving several crypto firms to pursue national trust bank charters.