Federal Reserve Governor Chris Waller has proposed a new “payment account” program that could allow crypto-focused firms to access the central bank’s payment system without needing a traditional banking license.
Speaking at the Federal Reserve payments conference, Waller said he had asked staff to explore what he called a “skinny master account,” an idea meant to help companies drive payments innovation.
According to Waller, the proposed procedure would provide basic access to the Federal Reserve’s payment rails for institutions that are legally eligible for accounts, particularly those actively engaged in digital payments and stablecoin issuance.
This arrangement, he said, could help firms that currently rely on third-party banks with Fed master accounts to process transactions.
However, the new system would differ from full master accounts by focusing on low-risk access. It would provide basic payment functions without the broader range of financial services normally attached to a master account.
Waller noted that many eligible entities involved in large scale payment operations might not require the full suite of features offered by a traditional Fed account.
Possible Benefits for Crypto Payment Firms
The concept could benefit crypto firms working in payment infrastructure and stablecoin systems, including companies such as Ripple that have applied for direct Fed master accounts.
By offering an alternative account type, the Federal Reserve could reduce the lengthy and complex process involved in master account approvals while maintaining regulatory safeguards.
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Waller noted that payment accounts would be built to ensure operational security and limit exposure to systemic risk. The proposal, still in its conceptual stage, aims to keep pace with the rapid evolution of payment technologies while maintaining control over the broader financial system.
Operational Rules and Risk Controls
Under the program, payment accounts would not receive interest on balances. The Reserve Banks could set balance caps to control their impact on the Federal Reserve’s balance sheet.
These accounts would also exclude access to daylight overdrafts, borrowing facilities, or the discount window. In addition, payments would be rejected if balances reached zero, ensuring strict transaction control.
However, Waller confirmed that the Federal Reserve would engage with stakeholders to discuss the advantages and limitations of the approach.
He also clarified that the payment account proposal remains a prototype meant to encourage dialogue on modernizing access to the Fed’s payment infrastructure.
