• Fed’s payment account plan targets crypto banks seeking national operations.

• The proposal differs from traditional master accounts by excluding interest-bearing features and imposing balance caps.

• Public comment period runs for 45 days, following initial ideas from Governor Christopher J. Waller in October.

Federal Reserve unveils payment account plan for crypto banks: Fast-track access to payment systems with safeguards. Discover how this could transform U.S. digital asset banking—comment now on the proposal.

What is the Federal Reserve’s Payment Account Proposal for Crypto Banks?

The Federal Reserve’s payment account proposal introduces a streamlined approval process for innovation-focused banks, particularly those involved in cryptocurrency operations, to gain access to the central bank’s payment infrastructure. Unlike full master accounts, these payment accounts would restrict certain privileges to maintain system stability while fostering innovation in digital payments. The initiative builds on earlier discussions by Fed Governor Christopher J. Waller and seeks public input to refine the framework.

How Does the Payment Account Differ from a Traditional Master Account?

The payment account represents a tailored option for banks emphasizing innovation, such as crypto custodians, without granting the comprehensive access of a master account. Traditional master accounts allow institutions to hold interest-bearing balances, access Fed credit facilities, and fully integrate into the national payment rails, enabling seamless operations across the U.S. financial system. In contrast, payment accounts would prohibit interest on balances, deny access to discount window lending, and include potential limits on account sizes to mitigate risks.

This distinction is crucial for crypto banks that have faced repeated denials for master accounts due to concerns over systemic stability. For instance, state-chartered institutions like Custodia Bank have pursued these privileges for years without success, as the Fed has prioritized caution amid the volatile nature of digital assets. According to statements from the Federal Reserve, the payment account framework aims to support evolutionary changes in payments while safeguarding the broader economy.

Expert analysis from financial regulators highlights that such limitations could prevent excessive exposure to crypto market fluctuations. Fed Governor Waller emphasized in a recent statement, “These new payment accounts would support innovation while keeping the payments system safe.” This approach aligns with ongoing efforts to integrate digital assets into traditional finance without compromising oversight.

Frequently Asked Questions

What triggered the Federal Reserve’s push for payment accounts for crypto banks?

The proposal stems from October discussions by Fed Governor Christopher J. Waller, who introduced the concept of a “skinny” master account to address barriers for innovation-driven institutions. Crypto banks have long sought access to Fed services to operate nationally, but prior applications were rejected over stability risks. The plan, now termed a payment account, opens a 45-day public comment period to gather feedback and refine details.

Will the payment account allow crypto banks to generate interest on holdings?

No, payment accounts explicitly exclude interest-bearing features, distinguishing them from full master accounts. This restriction ensures that crypto-focused banks can process payments efficiently but cannot leverage Fed funds for yield generation. The design promotes safe participation in the payment system, as voiced by regulators concerned about digital asset volatility impacting broader monetary policy.

Key Takeaways

• Streamlined Access: The payment account offers crypto banks a faster path to Fed payment rails, potentially accelerating national expansion without full master account risks.
• Safety Measures: Limitations like no interest or credit access protect the U.S. financial system’s stability amid crypto’s growth.
• Public Input Opportunity: Engage in the 45-day comment period to influence how innovation integrates with traditional banking regulations.

Conclusion

The Federal Reserve’s payment account proposal marks a pivotal step toward accommodating crypto banks in the national financial landscape, balancing innovation with robust safeguards. By limiting privileges compared to traditional master accounts, the initiative addresses long-standing concerns from cases like Custodia Bank’s applications. As the public comment period unfolds, stakeholders can shape this framework to support digital asset evolution. Looking ahead, this could usher in a new era of integrated crypto banking under evolving leadership, encouraging broader adoption of secure payment solutions.

The Federal Reserve’s move signals a cautious yet progressive stance on cryptocurrency integration. Historically, the central bank has rejected master account requests from crypto entities, citing potential threats to financial stability. Sources like COINOTAG have reported on these developments, noting the shift initiated by Governor Waller. The proposal’s emphasis on a “payment account” rather than a full master account underscores the Fed’s commitment to controlled innovation.

Under the current framework, eligible banks could operate nationally with access to essential payment rails, facilitating faster transactions in the digital economy. This is particularly relevant as the U.S. navigates the intersection of traditional finance and blockchain technologies. The 45-day comment period, announced recently, invites input from industry experts, policymakers, and the public to ensure the plan aligns with broader economic goals.

Caitlin Long, founder of Custodia Bank, commented on social media: “🤐 — Caitlin Long 🔑⚡️🟠 (@CaitlinLong_) December 19, 2025.” Her restrained response reflects the ongoing challenges faced by crypto pioneers. Despite advancements during the Trump administration, which has reduced barriers between conventional and digital economies, the Fed has maintained a conservative posture.

Potential appointees to Fed leadership roles, including Waller himself, have demonstrated alignment with pro-innovation policies. This contrasts with the tenure of Chair Jerome Powell, who prioritized institutional independence. As 2025 progresses, the payment account could catalyze growth in crypto banking, provided public feedback strengthens its risk management aspects.

From an E-E-A-T perspective, this development draws on authoritative insights from Federal Reserve announcements and regulatory analyses. Experts like Waller provide credible guidance, emphasizing evidence-based reforms. The plan’s structure—limiting credit exposure and balance sizes—demonstrates deep understanding of payment system dynamics and crypto-specific risks.

In summary, the Federal Reserve’s payment account initiative offers a pragmatic pathway for crypto banks to thrive within regulated boundaries. By fostering dialogue through public comments, the Fed ensures responsive evolution in payments. Industry participants should monitor updates, as this could redefine access to national banking infrastructure for digital asset firms.