The U.S. Federal Reserve took another step toward special limited-payment accounts that would provide a lighter version of the master account services the central bank offers to its full-fledged banks, opening a comment period on the latest description of the new accounts.
Companies with various business models can use such accounts to clear and settle payments to increase speed and reduce their costs, but without master account status, the Federal Reserve explained in a statement Wednesday. The central bank, which supervises and regulates its member banks, had issued a request for information in December to begin crafting the concept with an initial 45-day comment period, and this approach is “substantially similar to the prototype described” in that effort.
Gaining this improved access to the Federal Reserve’s payment pathways has been a major goal within the crypto sector, and the Fed’s previous proposal was commonly referred to as “thin” accounts.
“Payment account holders would not have access to intraday credit or the discount window, would not earn interest on balances held at a Reserve Bank, and would only have access to payment services with automated controls to prevent overdrafts,” the Fed said in the statement about its new proposal, which will open for a 60-day comment period.
But in response to comments made to the Federal Reserve since December, it revised parts of the idea, noting that “ending 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 get a limited master account, although that access was granted by the Federal Reserve Bank of Kansas City and not under a federal rule by the Federal Reserve board in Washington. The Federal Reserve said it has now asked regional banks to pause consideration of certain requests while the rule is finalized.
Just a day earlier, President Donald Trump issued a related executive order calling on the Federal Reserve to review how it grants uninsured depository institutions and nonbank financial companies access to accounts and payment services. This order also called for an examination of the 12 regional Federal Reserve banks that act independently of the board to establish payment accounts.
