Federal Reserve Opens 60-Day Comment Period for Limited-Purpose “Skinny” Payment Accounts

The Federal Reserve has released a new proposal for limited-purpose payment accounts, known as “skinny accounts,” and opened a 60-day public comment period for the plan.

“opened a 60-day public comment period”

bloomingbit

The Fed said the accounts are a scaled-down version of Fed master accounts and are designed so companies with a range of business models can process payments faster and at lower cost, while still not receiving the same powers as commercial banks.

@coindesk

Institutions holding the account would not have access to intraday credit or the discount window, would not earn interest on deposits held at the central bank, and would be limited to payment services equipped with automated overdraft protections.

CoinDesk reported that the Fed’s new proposal would let firms clear and settle payments to increase speed and reduce costs, but without master-account status, and that the Fed said the payment account holders would not have access to intraday credit or the discount window.

The Fed also said it revised parts of the earlier concept after gathering industry feedback, easing the method for calculating balance caps and the standards for maximum balances, while opening the updated proposal for public comment.

President Donald Trump signed an executive order titled “Integrating Financial Technology Innovation into Regulatory Frameworks,” directing federal regulators to review how the Fed grants access to payment accounts and services for non-bank financial companies and uninsured depository institutions.

The order calls on federal agencies to audit existing rules within three months and identify regulations that “unduly impede” fintech firms from partnering with federally regulated institutions, with regulators required to act within six months.

AMBCrypto

Decrypt reported that the directive asks the Federal Reserve to evaluate within 120 days whether it has legal authority to grant non-bank financial companies, including digital asset firms, direct access to Federal Reserve payment accounts.

In a separate development, CoinDesk said Kraken became the first crypto bank to get a limited master account in March, and the Fed asked regional Federal Reserve banks to pause their consideration of certain applications while it finishes the rule.

The executive order also requested examination on the 12 regional Fed banks acting independently of the board to set up payment accounts, as described in the bloomingbit report.

Kraken Financial, the Wyoming-licensed bank tied to Payward, was granted a master account with the Federal Reserve, making it the first digital asset bank in the history of the United States to obtain direct access to the Federal Reserve's payment infrastructure.

“This milestone marks the convergence of crypto infrastructure and sovereign financial rails”

Boursier

Boursier.com quoted Kraken co-CEO Arjun Sethi saying, “This milestone marks the convergence of crypto infrastructure and sovereign financial rails,” and described the ability to settle directly on Fedwire while reducing dependence on correspondent banks.

The La Tribune report said the master account is an account opened directly on the books of the Federal Reserve and allows a bank to settle payments in central bank money and access payment systems without going through another intermediary bank.

PaymentsJournal said the push follows Kraken’s “skinny” Fed account approval and that the order could ultimately allow crypto firms to move assets over Fedwire and the FedNow instant payment service, much as Kraken can now do through its skinny account.

The same PaymentsJournal piece framed the stakes around whether a master Fed account would give firms the ability to earn interest on overnight balances and potentially access the Fed’s discount window, while noting that historically these accounts have been reserved for insured depository institutions.