The U.S. Federal Reserve has taken another step toward limited special payments accounts that would offer a stripped-down version of the main account services the central bank offers its full banks, opening a comment period on the latest description of the new accounts.
Companies with diverse business models can use such accounts to clear and settle payments to speed up and reduce costs, but without primary account status, the Fed explained in a statement Wednesday. The central bank, which supervises and regulates its member banks, had issued a request for information in December to begin developing the concept with an initial 45-day comment period, and this approach is “substantially similar to the prototype described” in that effort.
Getting this improved access to the Fed’s payment channels has been an important goal in the crypto sector, and the Fed’s previous proposal was commonly referred to as “skinny” accounts.
“Payment account holders would not have access to intraday credit or the discount window, would not earn interest on balances held at a Reserve Bank, and would only have access to payment services with automated controls to prevent overdrafts,” the Fed said in the statement on its new proposal, which will be open for a 60-day comment period.
But in response to comments to the Fed since December, it reworked parts of the idea, noting that “closing balance limits would be based on an institution’s expected payment activity and the maximum closing balance would be increased.”
In March, Kraken became the first crypto bank to obtain a restricted master account, although this access was granted by the Federal Reserve Bank of Kansas City and not under a federal rule from the Fed board in Washington. The Fed said it is now asking regional banks to pause reviewing certain applications while it winds down the rule.
A day earlier, President Donald Trump issued a related executive order asking the Fed to review how it grants uninsured depository institutions and nonbank financial companies access to payment accounts and services. That order also requested a review of the Fed’s 12 regional banks acting independently of the board to open payment accounts.
