Federal Reserve Proposes Payment Account That Could Open Fed Rails to Crypto Firms

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The Federal Reserve has opened a 60-day public comment window on a proposal to create a specialized “payment account” that would give legally eligible non-bank financial institutions, including crypto-focused firms, direct access to its clearing and settlement infrastructure. The Board advanced the plan, building on a December 2025 request for information. It arrives one day after President Donald Trump ordered regulators to review crypto firms’ access to federal payment rails. How the Payment Account Differs From a Master Account The proposed payment account is a stripped-down version of the master account that traditional banks use to settle directly with the Fed. Holders would not receive intraday credit, discount window access, or interest on balances kept at a Reserve Bank. Automated controls would block any transaction that risks creating an overdraft. The Board also reiterated that account holders must implement controls against illicit finance. Importantly, the proposal does not expand who is legally eligible for a Fed account. It defines a new product available only to institutions that already meet the existing statutory criteria, with applicants able to hold either a payment account or a master account, not both. Compared with the December prototype, the Board made closing balance limits more flexible. Caps would now be tied to an institution’s expected payment activity, and the maximum allowed closing balance was raised. A Trump Executive Order Sets the Stage The proposal moves the Fed closer to a model that the Trump administration has been pushing. The executive order signed by Trump on May 19 directed federal banking regulators to identify rules that block fintech and digital asset firms from Fed payment services and to act within six months. That order, titled “Integrating Financial Technology Innovation into Regulatory Frameworks,” also instructed the Fed to establish transparent application procedures and decide on completed applications within 90 days. The payment account proposal is the first concrete response. The Board further asked Reserve Banks to temporarily pause decisions on Tier 3 access requests under its Account Access Guidelines. Tier 3 covers institutions with novel charters and limited federal supervision, the category that most crypto-focused entrants fall into. What It Means for Crypto Firms Already in Line A short list of crypto firms are pursuing direct Fed access. Kraken Financial became the first digital asset company to secure a Federal Reserve master account in March, after years of regulatory groundwork through its Wyoming Special Purpose Depository Institution charter. Ripple, Anchorage Digital, and money transfer firm Wise have all filed for similar access. A payment account would offer them a faster route than a full master account, though with materially fewer privileges. Caitlin Long’s Custodia Bank, by contrast, exhausted its legal options earlier this year after the Tenth Circuit Court of Appeals declined to rehear its case against the Fed. The new payment account category may give institutions like Custodia a second path. Industry groups remain split. The Independent Community Bankers of America has warned that broader Fed access for digital asset firms could heighten financial risk, while crypto advocates frame the proposal as a response to past debanking concerns. The 60-day comment period will determine how much flexibility the final framework provides to non-bank applicants. Whether the Tier 3 pause is lifted before the policy is finalized will signal how quickly applicants like Ripple can expect a decision.

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