The Federal Reserve has released a proposal that would allow certain digital asset and fintech firms to connect directly to its core payment and settlement systems through a new, limited type of “master account,” and is asking the public for comment.
New ‘skinny master accounts’ with limited privileges
Under the plan, a new category of accounts would be opened to some nontraditional financial entities that currently sit outside the federally insured banking system. These “skinny master accounts” would:
- Provide access for payment clearing and settlement
- Allow higher end-of-day balances than earlier drafts contemplated
- Not provide intraday credit
- Not allow borrowing from the Fed’s discount window
- Not pay interest on balances held at reserve banks
The framework is designed to give approved firms a direct connection to U.S. payment rails without relying on intermediary banks, while keeping key protections for the Federal Reserve Banks and the broader payments network.
Shift from traditional eligibility rules
At present, direct access to Federal Reserve accounts is generally restricted to licensed depository institutions with federal insurance. The new proposal would broaden eligibility, but only for a narrower set of services and under tighter risk controls than traditional master accounts enjoy.
The structure largely mirrors a draft released in December 2025, but with refinements such as the expanded end-of-day balance ceiling. The Fed says the revision reflects growing demand from nonbank entities, including digital asset platforms and fintech firms, seeking direct participation in the payment system.
Policy roots in executive order on digital assets
The initiative stems from an executive order signed by former President Donald Trump directing the Fed to modernize its rules to support the integration of digital assets into the traditional financial system. The order requires the central bank to:
- Review its oversight of reserve accounts
- Reassess eligibility criteria for fintech and crypto-related entities
- Consider how new technologies can be folded into existing regulatory frameworks
In response, the Fed has been reexamining how nonbank firms might gain controlled access to its infrastructure without importing undue risks.
Temporary pause for tier 3 applications
While the review continues, the Fed’s Board has advised regional reserve banks to temporarily halt progress on pending applications from tier 3 entities — a category that includes digital asset and fintech firms — for this type of access.
This pause is meant to ensure that any approvals align with the final policy and that risk safeguards are clear before new connections to the payment system are granted.
Internal split over risk safeguards
Inside the Fed, the approach has support but is not unanimous.
- Governor Christopher Waller has promoted the new accounts as a practical way for eligible institutions to manage clearing and settlement directly, cutting frictions and costs in payments.
- Governor Michael Barr has raised concerns that the framework may not yet contain sufficient protections to guard against money laundering and terrorist financing.
That internal debate underscores the broader policy tension: how to encourage innovation in financial services while maintaining stringent controls over financial crime and systemic risk.
Regulatory backdrop: stablecoins and market structure
The proposal lands amid a wider regulatory drive in Washington around digital assets:
- The GENIUS Act focuses on payment stablecoins and tasks the Treasury with writing rules for stablecoin issuers, including anti-money laundering requirements.
- The Clarity Act aims to define a broader market structure for digital assets, including how different regulators share oversight.
Treasury officials are currently drafting implementing rules under the GENIUS Act, which will interact with the Fed’s access framework by setting standards for entities that might seek these new accounts.
Traders and firms in the sector are expected to watch both the Fed’s comment process and the progress of these bills closely, as the combined outcome will shape the operating landscape for payment-focused crypto and fintech businesses.
Public comment period and market attention
The Fed’s request for comment follows an earlier information-gathering effort that closed in February 2026. Market participants will study the new text to understand:
- Which types of entities could qualify
- What risk management and compliance requirements will apply
- How quickly approved firms could obtain operational access
Responses during the comment period may influence how strict or flexible the final framework becomes, particularly around anti-money laundering, cybersecurity, and operational resilience.
Monetary policy expectations shift
The proposal also arrives in a changing macroeconomic environment. Expectations for U.S. monetary policy have moved noticeably:
- The likelihood of rate cuts in 2026 has fallen.
- As of May 20, CME FedWatch data indicated a 54.1% probability of a rate increase by the December meeting.
Higher-for-longer or rising interest rates can weigh on risk-sensitive assets, including many digital tokens, by increasing funding costs and making safer yields more attractive.
Mixed signals in digital asset markets
Digital asset pricing and flows show an uneven picture:
- Bitcoin is trading near $77,000, with market dominance just under 58%, signaling relatively strong performance compared with the broader sector.
- Ethereum has lagged, down about 30% since the start of the year. Products tracking Ethereum have seen sustained outflows, including roughly $404 million pulled from spot ETFs over two consecutive weeks.
The split suggests traders are differentiating more sharply between assets, even as policy developments could reshape the underlying market infrastructure.
Enforcement remains active, especially around bitcoin
Regulatory enforcement continues to be a defining feature of the landscape. From the first quarter of 2015 through the third quarter of 2025, the Commodity Futures Trading Commission brought 130 enforcement actions related to virtual currencies. Of these, 98 involved bitcoin.
That record underscores that any new access to central bank payment systems for digital asset firms will be layered on top of an already active enforcement regime, rather than replacing it.
What the framework could mean
If adopted, the Fed’s proposal would mark a significant structural change: certain digital asset and fintech firms could plug directly into the U.S. payment system via constrained “skinny master accounts,” potentially lowering operating costs and settlement frictions by reducing their dependence on traditional banking partners.
However, the accounts would fall well short of full bank privileges, and final terms will depend on how the Fed resolves internal concerns over financial crime controls and how parallel legislation and Treasury rules ultimately take shape.
Curious how traditional finance meets crypto? Explore our detailed primer on TradFi and how it works in today’s digital markets.
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