The Federal Reserve released the latest version of its proposal to create a “lean” master account, updating the proposal first published last December. In the same week, President Donald Trump signed an executive order for greater integration of digital assets with existing payment networks.
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The narrative
US President Donald Trump signed two executive orders on Tuesday. One directed the broader government to update existing rules to better integrate crypto into payment systems, while the other directed the Treasury Department and regulators to strengthen rules in the Bank Secrecy Act. The next day, the Federal Reserve Board published its updated proposal for a thin master account, detailing more details about its approach to giving crypto firms access to its payment rails.
Why it matters
The integration of the crypto industry with the broader federal payment system is certainly a goal for the industry as a whole. Last week’s proposal may bring it one step closer.
To break it down
The Federal Reserve’s proposal on Wednesday updates its thin master account request for information first published in December 2025 and outlines how the central bank envisions giving fintech and crypto firms access to its payment rails without requiring them to be full-fledged, Office of the Controller of the Currency-chartered banks.
The fintech-focused order directed federal regulators to review their existing policies to evaluate how they regulate financial institutions and identify rules that could block fintech companies from working with regulated entities.
The order also directed the Fed to review how it handles uninsured depository institutions and their access to payment accounts.
Part of that review includes having Federal Reserve member banks assess whether they can independently assign payment accounts to entities.
Feds can’t necessarily do all of this on their own; Congress may need to pass legislation that further details the types of entities that may qualify for an account.
The BSA-focused order directs the U.S. Treasury Department and regulators to issue guidance to banks and other entities.
“My administration will not tolerate national security and public safety risks caused by illegal cross-border financial activity, nor will it allow risks to our financial system associated with the extension of credit or financial services to the inadmissible and removable alien population,” Trump’s order reads.
This would include an advisory noting “payroll tax evasion,” shell companies, and “the strategic use of unregistered money service companies, third-party payment processors, or peer-to-peer platforms to facilitate “off-the-books” payroll payments designed to circumvent the Bank Secrecy Act’s reporting thresholds or tax obligations,” among other types of entities.
Although the order did not explicitly mention cryptocurrency or decentralized financial trading platforms, they could be caught by any ultimate guidance, said Nicholas Anthony, a researcher at the Cato Institute.
The next question is what can be in the guidance and advice.
“Right now it’s in the hands of the Treasury and the Treasury is able to apply it not only as it sees fit but to whom it sees fit because of the wider power that the Treasury has under the Bank Secrecy Act,” he said.
The Quarrels of the Senate
The Senate Banking Committee voted to advance the Clarity Act just over a week ago.
The expectation was that the overall Senate could come to this sometime in the next month, to sort out ethics and other outstanding issues, and then vote on whether to send the bill to the House of Representatives. That timeline took a bit of a hit Thursday when the Senate left town for the Memorial Day recess without voting on a reconciliation bill that would, among other things, fund the Department of Homeland Security.
The question is this: There really is only so much time to get things done on the Senate floor. There are 19 weekdays in June and 15 in July. There are five more in August, and then everyone is gone for the rest of the summer.
In that time, the Senate must sort through reconciliation, a renewal of the Foreign Intelligence Surveillance Act (which expires in mid-June) and possibly a housing bill.
Increasing tension is why the Senate left the city. President Donald Trump’s administration wanted $1 billion for its planned East Wing ballroom and, more recently, another $1.8 billion for a weapons fund that members of both parties have referred to as a “slush fund.” The Senate had already dropped the ballroom funding from the bill, but the other $1.8 billion appeared to be too much to negotiate this week.
Negotiations on these issues — if there is no backroom to deal with through the recess — can drag out the negotiation process, further limiting Clarity’s floor time. And of course there is still the ethics provision itself in the bill on market structure. The White House has yet to indicate what exactly it will accept, so it’s another negotiation to watch.
This week
- The House and Senate are on recess this week.
If you have thoughts or questions about what I’ll be discussing next week or any feedback you’d like to share, feel free to email me at [email protected] or find me at Bluesky @nikhileshde.bsky.social.
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See you next week!
