U.S. fintech groups are pressing the Federal Reserve to move forward with a proposal that would grant certain non-bank financial firms direct access to the central bank’s payment infrastructure, a move that could quietly reshape how crypto-adjacent businesses settle transactions.
The effort is being led by the American Fintech Council, which argues that a narrowly designed Federal Reserve “payment account” could expand competition and modernize payments without introducing the risks associated with full banking privileges.
“A well-designed payment account can expand competition and responsible innovation in payments without introducing new risk,” said Phil Goldfeder, the council’s CEO, in a statement on Monday.
A narrower path to Fed access
At the center of the debate is whether the Fed should allow eligible non-bank institutions to clear and settle payments directly on its balance sheet without granting a full Master Account, which typically comes with access to interest-bearing balances, the discount window, and broader banking privileges.
Under the framework being discussed, a payment account would carry strict limitations. Overnight balances would be capped, no interest would be paid, access to emergency lending would be barred, and usage would be restricted to final settlement systems such as Fedwire, with potential inclusion of FedNow.
Fintech groups backing the proposal say the current sponsor-bank model forces payment firms to rely on intermediaries, adding cost, slowing settlement, and concentrating operational risk within a small number of banks.
They argue that direct settlement access, without lending authority or deposit-taking powers would improve efficiency without undermining financial stability.
Banks warn of systemic risk
Banking trade groups see the issue very differently.
In a joint submission filed last week, the Bank Policy Institute, The Clearing House Association, and the Financial Services Forum warned that payment accounts would represent a significant policy shift by allowing uninsured or lightly supervised institutions to interact directly with the Federal Reserve.
Even with balance caps and functional limits, the banks argue that such accounts could enable deposit-like activity outside the federal safety net, increasing run risk and weakening the existing framework built around deposit insurance and prudential oversight.
The joint letter explicitly flags stablecoin issuers and other crypto-linked business models as examples of firms that could benefit from streamlined access to Fed settlement, despite lacking the regulatory safeguards applied to banks.
While the Fed’s proposal does not mention crypto directly, bank groups argue that crypto-adjacent firms are among the most likely users of a tailored account that allows settlement in central bank money without full supervision.
They also raised concerns around anti-money laundering controls, sanctions compliance, and operational resilience if non-banks are granted direct access to critical payment rails.
A familiar fault line
The debate echoes earlier disputes over access to the Federal Reserve system, including the ongoing legal battle involving Custodia Bank.
Custodia, a Wyoming-chartered crypto bank, has repeatedly challenged the Fed’s refusal to grant it a Master Account, arguing that regulators are effectively blocking new banking models. Courts, however, have sided with the Fed, affirming its broad discretion to deny access in the interest of financial stability.
That backdrop looms over the current discussion, even as the Fed frames the payment account concept as an exploratory, limited prototype rather than a wholesale expansion of access.
Signals from the Fed
At a conference on Monday, Federal Reserve Governor Christopher Waller added fuel to the debate, saying the central bank is considering rolling out a pared-down “skinny” master account by the end of the year.
Such an account would provide limited payments access while excluding interest on balances and discount-window borrowing a structure that closely resembles the payment account concept now dividing banks and fintechs.
How the Fed ultimately resolves the issue could determine whether the boundary between banks, fintechs, and crypto-linked firms remains intact, or begins to blur inside the U.S. payments system.
Tanya Petrusenko
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