The Federal Reserve released the latest version of its proposal to create a “thin” master account, updating the proposal first published last December. That same week, President Donald Trump signed an executive order mandating greater integration of digital assets with existing payment networks.
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the narrative
US President Donald Trump signed two executive orders last Tuesday. One directed the broader government to update existing regulations to better integrate cryptocurrencies into payment systems, while the other directed the Treasury Department and regulators to strengthen Bank Secrecy Act regulations. The following day, the Federal Reserve Board released its updated proposal for a thin master account, laying out more details on its approach to granting crypto companies access to its payment lanes.
Why is it important
Integrating the cryptocurrency industry with the broader federal payments system is certainly a goal for the industry as a whole. Last week’s proposals may bring it one step closer.
breaking it
Wednesday’s Federal Reserve proposal updates its slim master account information request first published in December 2025, outlining how the central bank plans to grant fintech and cryptocurrency companies access to its payment pathways without requiring them to be fully-fledged, Office of the Comptroller of Banks chartered by the currency.
The fintech-focused order directed federal regulators to review their existing policies to evaluate how they regulate financial institutions and identify rules that could prevent financial technology companies from partnering with regulated entities.
The order also directed the Federal Reserve to review how it handles uninsured depository institutions and their access to payment accounts.
Part of that review includes Federal Reserve member banks evaluating whether they can independently grant payment accounts to entities.
The Federal Reserve can’t necessarily do all of this alone; Congress may need to pass legislation that further details what types of entities can qualify for an account.
The BSA-focused order directs the Treasury Department and U.S. regulators to issue guidance to banks and other entities.
“My Administration will not tolerate risks to national and public security caused by illicit cross-border financial activities, nor will it allow risks to our financial system posed by the extension of credit or financial services to the inadmissible and expellable foreign population,” Trump’s order said.
This would include a notice flagging “payroll tax evasion,” shell companies, and “the strategic use of unregistered money services businesses, third-party payment processors, or peer-to-peer platforms to facilitate ‘off-register’ wage payments intended to circumvent the reporting thresholds or tax obligations of the Bank Secrecy Act,” among other types of entities.
While the order does not explicitly mention cryptocurrencies or decentralized finance trading platforms, they could be caught up in any final guidance, said Nicholas Anthony, a researcher at the Cato Institute.
The next question is what the guidance and counseling might contain.
“Right now it’s in the hands of the Treasury, and the Treasury can apply it not only as it sees fit, but also to whomever it sees fit, because of the broader power that the Treasury has under the Bank Secrecy Act,” he said.
Senate Shenanigans
The Senate Banking Committee voted to advance the Clarity Act just over a week ago.
The expectation was that the full Senate could come to this sometime next month, to resolve ethics and other outstanding issues and then vote on whether to send the bill to the House of Representatives. That schedule was slightly disrupted Thursday, when the Senate left town for its Memorial Day recess without voting on a reconciliation bill to fund the Department of Homeland Security, among other things.
Here’s the thing: There’s actually a time limit on getting things done on the Senate floor. There are 19 working days in June and 15 in July. There are five more in August and then they all leave for the rest of the summer.
In that time, the Senate has to pursue reconciliation, a renewal of the Foreign Intelligence Surveillance Act (which is set to expire in mid-June) and possibly a housing bill.
Adding to the tension is the reason 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, which members of both parties have referred to as a “slush fund.” The Senate had already removed ballroom funding from the bill, but the other $1.8 billion seemed like too much to negotiate this week.
Negotiations on these issues (if there is no agreement behind the scenes during the break) can prolong the negotiation process, further limiting Clarity’s time. And of course there is still the ethics provision in the market structure bill. The White House has not yet indicated what exactly it might accept, so this is another negotiation to pay attention to.
This week
- The House and Senate are on recess this week.
If you have any ideas or questions about what I should discuss next week or any other feedback you would like to share, feel free to email me at [email protected] or find me on Bluesky @nikhileshde.bsky.social.
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See you next week!
