The U.S. central bank took another step toward special limited payment accounts that would provide a lighter version of the master account services the central bank offers its full-fledged banks, opening a comment period on the latest description of the new accounts.
Companies with different business models can use such accounts to clear and settle payments to increase speed and reduce their costs, but without master account status, the Fed explained in a Wednesday statement. The central bank, which oversees and regulates its member banks, had issued a request for information in December to begin fleshing out the concept with an initial 45-day comment period, and that approach is “substantially similar to the prototype outlined” in that effort.
Achieving this improved access to the Fed’s payment rails has been a significant goal within the crypto sector, and the Fed’s previous proposals were commonly referred to as “skinny” accounts.
“Payment account holders would not have access to intraday credit or the discount window, would not earn interest on balances in a reserve bank, and would only have access to payment services with automated checks to prevent overdrafts,” the Fed said in the statement on its new proposal, which will be open for a 60-day comment period.
But in response to comments to the Fed since December, it revised parts of the idea, noting that “closing balance limits would be based on an institution’s expected payment activity, and the maximum closing balance was increased.”
In March, Kraken became the first crypto bank to be granted a limited master account, although this access was granted by the Federal Reserve Bank of Kansas City and not under a federal rule from the Fed Board of Governors in Washington. The Fed said it has now asked regional banks to pause their processing of certain applications while it finalizes the rule.
Just a day earlier, President Donald Trump issued a related executive order asking the Fed to review how it gives uninsured depository institutions and non-bank-funded companies access to payment accounts and services. That order also requested investigation into the 12 regional Fed banks that acted independently of the board to set up payment accounts.
