The US Federal Reserve is pressing ahead with plans to introduce a pared-back alternative to its highly sought-after master accounts, a move that could reshape how crypto and innovation-focused banks access the nation’s payments system. The central bank has formally invited public comment on the proposal, signalling that it is serious about creating a faster, more attainable approval pathway for institutions that have long been shut out of the Fed’s infrastructure.
The idea was first raised in October by Federal Reserve Governor Christopher Waller, who proposed what he described as a “skinny” master account. Master accounts are essential for banks that want to operate nationally, as they provide direct access to the Federal Reserve’s payment rails. Until now, crypto-focused banks have repeatedly failed in their attempts to secure such accounts, with regulators arguing that granting them could threaten financial stability.
In its latest announcement, the Fed reframed the concept, referring to it instead as a “payment account”. While the new label may appear modest, the implications could be significant. The central bank has made it clear that these payment accounts would not carry the full privileges of traditional master accounts. Holders would not be able to earn interest, tap into Federal Reserve credit facilities, or enjoy unrestricted balances. Caps on account balances are also likely, reinforcing the limited nature of the access on offer.
Despite these constraints, the proposal represents a notable shift in tone. A streamlined approval process that allows crypto banks to connect directly to the Fed’s payment systems and operate across state lines would mark a major departure from the central bank’s historically cautious stance on digital assets. Supporters argue it could encourage responsible innovation while keeping systemic risks in check.
Governor Waller has positioned the initiative as a way to balance progress with prudence, saying the new accounts would foster innovation without compromising the safety of the payments system. The 45-day public consultation period is intended to gather feedback and help the Fed adapt to changing payment technologies and business models.
The proposal arrives against a backdrop of long-running frustration among state-licensed crypto banks, particularly firms like Custodia, which have spent years fighting — unsuccessfully — for full master accounts. Custodia recently suffered a legal setback but continues to pursue rare appeals in an effort to overturn previous rulings.
Politically, the timing is also notable. While the Trump administration has rolled back several policies that once separated traditional finance from crypto, the Federal Reserve’s leadership has remained more guarded. That dynamic could soon change. With President Donald Trump expected to appoint a new Fed chair next year, candidates — including Waller — have increasingly signalled alignment with the administration’s pro-innovation agenda, marking a potential turning point in how the central bank approaches crypto banking in the United States.
