The Federal Reserve opened a public comment period for a proposal that could give legally eligible non-bank financial institutions restricted direct access to core Fed payment services. The plan would create a narrower version of a master account, giving fintech and crypto firms a potential path to faster clearing and settlement without granting bank-level privileges.
The proposal is still under review, and the Fed has temporarily paused decisions on Tier 3 access requests, the category that covers most crypto entities. That pause keeps the policy stakes high, especially after a May 19 executive order directed regulators to evaluate broader fintech access to critical payment infrastructure.
A Narrow Account With Strict Limits
The account, informally described as a “skinny” master account, would allow direct access only to specific payment services: Fedwire Funds Service, National Settlement Service and FedNow Service. The structure is designed to provide connectivity without full central-bank privileges, limiting the account’s use to payment activity rather than broader banking functions.
Holders would not receive intraday credit or access to the discount window, and balances kept at a Reserve Bank would not earn interest. The Fed also proposed balance caps tied to payment activity, with an absolute ceiling of $1 billion.
Those limits are meant to address the main objections from banks and industry groups. Traditional financial institutions have warned about uninsured non-bank balances, retail funding disintermediation and regulatory arbitrage, arguing that direct access could create systemic risks if not tightly controlled.
Fintech and crypto firms see the proposal differently. Direct access could reduce intermediation costs, improve liquidity management and shorten settlement cycles, especially for firms that currently rely on partner banks to reach Fed payment rails.
Risk Controls Will Shape the Final Framework
Kraken Financial’s Wyoming SPDI received a limited master account in March 2026, creating an early precedent for restricted access. That example now sits in the background of a broader policy debate over how far the Fed should open its infrastructure to non-bank firms.
Operational resilience, cybersecurity and illicit-finance controls sit at the center of the proposal. Strict AML/CFT compliance will be a gating issue, with account restrictions serving as a primary safeguard for monetary policy, settlement stability and credit-risk containment.
The Federal Reserve’s request for comment states that the proposal would give legally eligible non-bank financial institutions direct access to its clearing and settlement infrastructure. That access, however, would come with a new compliance burden, not simply a cheaper route into federal payment systems.
The comment window will run for 60 days after publication in the Federal Register, while the May 19 executive order sets a 120-day timetable for agency reporting to the White House. The final design will depend on public feedback, Fed risk assessments and supervisory guardrails, leaving crypto treasuries and institutional traders with a potential path to lower settlement friction, but only under tighter operational controls.
