Years of waiting in the crypto industry! Fed plans to launch a "streamlined master account" to allow crypto companies to access the central bank payment system.

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The Fed recently announced a new proposal to introduce "special-purpose limited-access accounts," allowing fintech and cryptocurrency companies to access the Fed payment system with lower barriers and enjoy the central bank settlement convenience previously reserved for traditional banks. This proposal has now entered a 60-day public comment period. The Fed stated in its announcement that many startups with diverse business models, even without full "master account" eligibility, will be able to conduct payment clearing through these special accounts in the future, thereby significantly improving transaction efficiency and reducing operating costs. In fact, the Fed had already issued a request for information last December and conducted a 45-day preliminary comment period. The latest framework proposed this time essentially continues the prototype outlined in that previous plan. Details of the "Master Account Lite" Revealed For a long time, gaining access to the Fed payment channel has been a long-sought goal for the cryptocurrency industry, as it would mean that crypto firms would no longer need to rely heavily on traditional commercial banks as intermediaries. The early proposals put forward by the Fed for these non-traditional institutions are often jokingly referred to in the industry as "master account lite." So, what are the limitations of this lightweight account? The Fed stated in its announcement: Institutions holding these types of payment accounts will not have access to intraday credit, will not be able to use the discount window, and balances held at the Fed will not earn interest. Furthermore, these accounts can only use payment services equipped with "automated overdraft control mechanisms." On the other hand, incorporating feedback from various sectors since last December, the Fed has also adjusted some regulations. The most significant change is that the "end-of-day balance cap" for accounts will be set based on the institution's expected payment activity, and the maximum balance limit has been further increased, giving companies greater flexibility in capital management. In fact, as early as March of this year, the well-known cryptocurrency exchange Kraken took the lead, becoming the first cryptocurrency company to obtain a "limited-purpose master account." However, that account was approved by the Federal Reserve Bank of Kansas City, rather than through a unified authorization from the Federal Reserve Board in Washington. To avoid inconsistent practices across different regions, the Fed revealed that it has requested all regional Federal Reserve Banks to "pause" the review of specific applications until a unified national federal regulation is officially finalized. It is worth noting that just one day before the Fed issued its statement, U.S. President Donald Trump signed an executive order requiring the Fed to re-evaluate whether to allow "uninsured depository institutions, non-bank financial companies, and cryptocurrency firms" to obtain access to Fed master accounts and payment services. The executive order also calls for an investigation into whether the 12 regional Federal Reserve Banks in the U.S. possess excessive independent discretion to decide on their own who can use the Fed payment system.

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