The Federal Reserve has released the latest version of its proposal to create a “lean” primary account, updating the proposal first released last December. The same week, President Donald Trump signed an executive order ordering greater integration of digital assets with existing payment networks.
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The story
US President Donald Trump signed two executive orders last Tuesday. One ordered the government as a whole to update existing regulations to better integrate crypto into payment systems, while the other ordered the Treasury Department and regulators to strengthen Bank Secrecy Act regulations. The following day, the Federal Reserve released its updated proposal for a lean principal account, giving more details on its approach to granting crypto companies access to its payment rails.
Why it matters
Integrating the crypto industry into the broader federal payments system is certainly a goal for the industry as a whole. Last week’s proposals could bring us closer to this goal.
Break it down
The Federal Reserve’s proposal on Wednesday updates its Skinny Master Account request for information first issued in December 2025, explaining how the central bank plans to grant fintech and crypto companies access to its payment rails without requiring them to be fully-fledged, Office of the Comptroller of Monetary Chartered Banks.
The fintech-focused order directed federal regulators to review their existing policies to evaluate how they regulate financial institutions and identify rules that could prevent fintech companies from partnering with regulated entities.
The order also directs the Fed to review how it manages uninsured depository institutions and their access to payment accounts.
Part of this review involves asking Federal Reserve member banks to evaluate whether they can independently grant payment accounts to entities.
The Fed can’t necessarily do all this alone; Congress may need to pass legislation further clarifying what types of entities may be qualified to open an account.
The BSA-focused order directs the U.S. Treasury Department and regulators to issue guidance to banks and other entities.
“My Administration will not tolerate risks to national security and public safety caused by illicit cross-border financial activity, nor will it permit risks to our financial system posed by the extension of credit or financial services to the inadmissible and deportable alien population,” Trump’s order said.
This would include a notice alleging “payroll tax evasion,” shell companies, and “the strategic use of unregistered money services businesses, third-party payment processors, or peer-to-peer platforms to facilitate ‘unofficial’ payroll payments intended to circumvent Bank Secrecy Act reporting thresholds or tax obligations,” among other types of entities.
Although the order does not explicitly mention cryptocurrency trading or decentralized finance platforms, they could get stuck in any final guidance, said Nicholas Anthony, a researcher at the Cato Institute.
The next question is what might be included in the guidance and advice.
“Right now, this is in the hands of Treasury, and Treasury is able to apply it not only as it sees fit, but to whomever it sees fit, because of the broader power that Treasury has under the Bank Secrecy Act,” he said.
Senate shenanigans
The Senate Banking Committee voted in favor of the Clarity Act a little over a week ago.
The full Senate was expected to work on it over the next month, sorting out ethics and other outstanding issues, then voting on whether to send the bill to the House of Representatives. That schedule took a bit of a hit Thursday, when the Senate left town for the Memorial Day recess without voting on a reconciliation bill intended to fund, among other things, the Department of Homeland Security.
The problem is this: There really is only so much time to get things done in the Senate. There are 19 working days in June and 15 in July. There are five more in August, and then everyone is gone for the rest of the summer.
Meanwhile, the Senate will need to address reconciliation, renewal of the Foreign Intelligence Surveillance Act (which expires in mid-June), and possibly a housing bill.
Adding to the tension is the reason the Senate left town. President Donald Trump’s administration wanted $1 billion for its East Wing ballroom project and, more recently, another $1.8 billion for an arms fund, which members of both parties called a “slush fund.” The Senate had already defunded the bill, but the remaining $1.8 billion seemed too big to negotiate this week.
Negotiations on these issues – if there is no wiggle room during the holidays – may prolong the negotiation process, further limiting Clarity’s speaking time. And of course, there is still the ethics provision itself in the Market Structure Bill. The White House has yet to indicate exactly what it might agree to, so that’s another negotiation to watch.
This week
- The House and Senate are in recess this week.
If you have any ideas or questions about what I should discuss next week or any other comments you’d like to share, feel free to email me at nik@PK Press Club.com or find me on Bluesky @nikhileshde.bsky.social.
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See you next week!
