The U.S. Federal Reserve may be inching toward its
most significant shift on crypto access yet. Governor Christopher Waller,
speaking at the Fed’s first-ever payments innovation conference, said the
central bank must “embrace disruption” as it navigates the rise of digital
assets and decentralized finance.

A New Model for Payment Access

Waller proposed creating a “skinny” or limited version of the Fed’s master account, which could give crypto and
fintech firms direct, though restricted, access to the U.S. payment rails. These accounts would enable firms to move money
without relying on traditional banks, a long-standing hurdle for the sector.

The proposed accounts would differ from traditional
master accounts in several key ways. They would not earn interest, allow
daylight overdrafts, or grant borrowing rights through the Fed’s discount
window. Instead, they would provide limited access with balance caps to
minimize risk to the Fed’s balance sheet.

Historically, access to master accounts — which enable
direct settlement with the central bank — has been tightly guarded. Only
federally chartered banks have qualified, with nonbanks facing intense
scrutiny. Under the Fed’s current three-tiered system, the highest-risk
entities, such as crypto platforms not subject to federal supervision, face the
toughest review.

Ripple Effect Across Fintech and DeFi

Waller’s “payment account” proposal would represent a
meaningful departure from this framework, opening a potential path for nonbanks
and stablecoin issuers to interact more directly with the central bank’s
infrastructure.

While the idea marks a major shift for the U.S., it is
already common in other jurisdictions where nonbanks have partial access to
central payment systems. Waller said this reality underscores why the Fed must
evolve to remain competitive.

Waller’s comments drew attention from crypto and
fintech leaders, including Ripple CEO Brad Garlinghouse, who has previously
criticized Wall Street’s resistance to granting such access. Ripple is among
the firms seeking a Fed master account, which would allow direct participation
in the U.S. payments ecosystem.

For fintech companies and stablecoin issuers, a
“payment account” could bridge the gap between innovation and regulation,
granting limited but crucial entry into the U.S. financial core.

This article was written by Jared Kirui at www.financemagnates.com.

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