Federal Reserve Proposes Payment Account for Eligible Crypto Firms

Federal Reserve Proposes New Payment Account – Potential Direct Access to Fed Infrastructure for Eligible Crypto Firms

Key Takeaways

• The Federal Reserve has opened a 60-day public comment period on a proposal to create a specialized payment account for legally eligible non-bank financial institutions.
• The proposed account would allow clearing and settlement through the Federal Reserve but would not provide credit, interest on balances, or discount window access.
• The initiative follows a May 19 executive order by President Donald Trump directing regulators to review crypto firms’ access to federal payment rails.
• Institutions would be able to hold either a payment account or a master account, not both.
• The Federal Reserve has asked Reserve Banks to pause decisions on certain Tier 3 access requests while the framework is under review.

Federal Reserve Opens Comment Period on Specialized Payment Account

The Federal Reserve Board has advanced a proposal to establish a new type of account called a payment account. The account would be available to legally eligible financial institutions, including certain non-bank entities such as crypto-focused firms, for the specific purpose of clearing and settling payments through the Federal Reserve.

The proposal builds on a request for information issued in December 2025. The Board is now inviting public comment for 60 days before finalizing the framework. According to the Federal Reserve, the payment account would provide direct access to its clearing and settlement infrastructure, often referred to as federal payment rails.

The announcement came one day after President Donald Trump signed an executive order instructing federal banking regulators to review how fintech and digital asset firms access Federal Reserve payment services.

How the Payment Account Differs From a Master Account

The proposed payment account is designed as a limited version of the traditional master account used by banks. Master accounts allow institutions to settle directly with the Federal Reserve and provide access to additional services.

Under the new proposal, payment account holders would not receive intraday credit. They would also be excluded from the Federal Reserve’s discount window and would not earn interest on balances held at a Reserve Bank. Automated controls would be implemented to block any transaction that could create an overdraft.

The Board emphasized that institutions holding a payment account must implement controls to mitigate illicit finance risks. The proposal does not expand the categories of institutions that are legally eligible for Federal Reserve accounts. Instead, it introduces a new product that can be used by entities that already meet existing statutory criteria.

Applicants would be permitted to hold either a payment account or a master account, but not both. Compared with the December 2025 prototype, the updated proposal introduces more flexible closing balance limits. Caps would now be tied to an institution’s expected payment activity, and the maximum permitted closing balance has been increased.

Executive Order Directs Review of Crypto Access to Payment Rails

On May 19, President Trump signed an executive order titled Integrating Financial Technology Innovation into Regulatory Frameworks. The order directs federal banking regulators to identify rules that may block fintech and digital asset firms from accessing Federal Reserve payment services and to act within six months.

The executive order also instructs the Federal Reserve to establish transparent procedures for account applications and to decide on completed applications within 90 days. The payment account proposal represents the first formal step taken following that directive.

In addition, the Federal Reserve has asked Reserve Banks to temporarily pause decisions on Tier 3 access requests under its Account Access Guidelines. Tier 3 generally includes institutions with novel charters and limited federal supervision, a category that covers many crypto-focused applicants.

Implications for Crypto Firms Seeking Direct Federal Reserve Access

Several digital asset companies are currently pursuing direct access to Federal Reserve infrastructure. Kraken Financial became the first digital asset company to secure a Federal Reserve master account in March, following regulatory groundwork through its Wyoming Special Purpose Depository Institution charter.

Other firms that have filed for similar access include Ripple, Anchorage Digital, and the money transfer company Wise. For these institutions, a payment account could represent an alternative path to direct clearing and settlement access, although with fewer privileges than a full master account.

Custodia Bank, led by Caitlin Long, previously challenged the Federal Reserve in court after its application for a master account was denied. Earlier this year, the Tenth Circuit Court of Appeals declined to rehear the case, exhausting Custodia’s legal options. The newly proposed payment account category may provide institutions in a similar position with a different application route.

Industry reactions remain divided. The Independent Community Bankers of America has warned that expanding Federal Reserve access to digital asset firms could heighten financial risk. In contrast, crypto industry advocates describe the proposal as a response to concerns about debanking and access limitations faced by digital asset companies.

What the 60-Day Comment Period Means for Applicants

The 60-day public comment window will determine how the final framework is shaped, including how balance caps and operational controls are structured. It will also clarify how the Federal Reserve intends to handle Tier 3 applicants once the temporary pause is lifted.

For companies such as Ripple, Anchorage Digital, and Wise, the timeline for decisions may depend on whether the pause on Tier 3 access requests remains in place until the policy is finalized. The executive order requires decisions on completed applications within 90 days, introducing a defined procedural expectation.

The outcome of the comment process will therefore shape how non-bank financial institutions, including crypto-focused firms, interact directly with the Federal Reserve’s clearing and settlement systems.

Our Assessment

The Federal Reserve’s proposal establishes a new, limited payment account designed to give legally eligible non-bank institutions access to clearing and settlement services without extending full banking privileges. The initiative follows a presidential directive to review and adjust how fintech and digital asset firms access federal payment infrastructure. With a 60-day comment period underway and Tier 3 applications temporarily paused, the final framework will determine the operational path for crypto-focused institutions seeking direct engagement with the Federal Reserve’s payment systems.