New Account Model Targets Payment System Barriers
The U.S. Federal Reserve is studying a proposal to create a new kind of “payment account” that would allow smaller financial and fintech firms to directly connect to its payment infrastructure, potentially easing long-standing access issues faced by crypto and technology companies.
Fed Governor Christopher J. Waller unveiled the idea during the Payments Innovation Conference on Tuesday, saying the accounts would provide limited, controlled access to the Fed’s payment rails for companies that currently rely on partner banks.
“I believe we can and should do more to support those actively transforming the payment system,” Waller said. “To that end, I have asked Federal Reserve staff to explore the idea of what I am calling a ‘payment account.'”
The model would extend access to legally eligible institutions that process payments through intermediaries. The so-called “skinny master accounts” would connect these firms to the Fed’s settlement network while controlling for systemic and operational risk, Waller said.
Investor Takeaway
Context: Years of Restricted Access
The idea comes after a turbulent period for crypto and fintech firms seeking U.S. banking relationships. Under the previous administration, at least 30 executives said their companies were denied banking access in what critics dubbed “Operation Chokepoint 2.0.” The policy, never formally acknowledged, was described as an unofficial campaign to pressure banks into distancing themselves from crypto businesses following the collapses of Silvergate, Signature, and other crypto-friendly institutions in 2023.
Caitlin Long, founder and CEO of Custodia Bank, one of the firms denied a Fed master account, welcomed the move. “Thank you, Gov Waller, for realizing the terrible mistake the Fed made in blocking payments-only banks from Fed master accounts,” she wrote on X. “The Fed told courts that such firms would put financial stability at risk for being inherently unsafe and unsound. Thank you for admitting that’s not true — it never was true.”
Industry advocates said the “payment account” concept could reopen the door for payments-focused institutions that were previously sidelined. It could also clarify access rules under the Fed’s tiered account review guidelines introduced in 2022.
Regulatory and Technological Implications
The proposal comes as the Fed takes a more active role in payments innovation, exploring tokenization, smart contracts and AI-driven settlement models. “We are conducting hands-on research on tokenization, smart contracts, and the intersection of AI and payments for use in our own systems,” Waller said. “We do this to understand the innovation happening within the payment system and to evaluate whether these technologies could upgrade our own infrastructure.”
Analysts said such remarks indicate the Fed is becoming more open to engaging with emerging financial technologies, including blockchain-based settlement systems. While Waller’s comments did not commit to a specific timeline, the initiative could give regulated fintech and crypto firms a direct pathway into the core of U.S. financial plumbing — a privilege previously reserved for large banks.
Investor Takeaway
Outlook: A Measured Opening for Fintechs
Waller described the effort as exploratory, noting that any new account structure would require balancing innovation with financial stability. The Fed has not yet indicated whether the accounts would operate under its existing master account framework or through a parallel system. For now, the plan remains at the research stage.
Still, for fintechs and crypto firms shut out of traditional banking, the prospect of regulated access to the Fed’s payment rails represents a potential turning point. If adopted, the “payment account” could mark the first real modernization of the Fed’s access model in decades — one that aligns traditional oversight with the realities of a rapidly digitizing economy.
