The Battle for the 'Gatekeeper' Role in the Fed's Payment System: Institutional Game Between Traditional Banks and the Crypto World
- Core Viewpoint: A fierce battle is unfolding between the U.S. banking industry and crypto/fintech companies over the right to directly access the Federal Reserve's payment system. The banking sector is demanding entry thresholds and waiting periods to mitigate risks, while emerging companies are seeking to break through these restrictions to gain more direct access to financial infrastructure.
- Key Elements:
- Major banking lobbying groups have jointly requested a 12-month safe operation waiting period for entities before they can apply for a Federal Reserve payment account, particularly targeting newly licensed stablecoin issuers.
- The banking industry argues that the Fed lacks regulatory experience and direct authority over new applicant institutions, and that the current proposals are insufficient to prevent potential bank run risks.
- Crypto and fintech companies criticize the proposed "limited-purpose account" as overly restrictive, citing issues like excessively low overnight balance caps, lack of access to the FedACH system, and the fact that account balances do not earn interest.
- Some crypto companies are applying for state trust bank charters with the ultimate goal of obtaining access to a Federal Reserve master account, but the banking industry argues that master accounts should be limited to institutions directly supervised by federal regulators.
- The controversy stems from concerns that stablecoin yield products could divert bank deposits, and the specific regulatory rules for stablecoins under the framework of the proposed "Genius Act" have not yet been fully finalized.
Original Title: Banks Demand Delays as Crypto Firms Push for Fed Payment Access
Original Author: Emily Mason and Evan Weinberger, Bloomberg
Original Compilation: Peggy, BlockBeats
Editor's Note: The rules for accessing the U.S. payment system are at a critical juncture. The banking industry wants to continue guarding the gateway to the Federal Reserve to prevent bank runs and regulatory disorder, while crypto and fintech companies seek to bypass bank intermediaries and gain direct access to the core clearing system. Disagreements over stablecoin yields, account permissions, and regulatory responsibilities are intertwined, escalating this institutional debate. The focus of the controversy is no longer a specific account design, but rather who has the right to directly enter the core of the U.S. payment infrastructure.
The following is the original text:
The banking industry has officially stated its opposition to directly opening the Federal Reserve's payment system to crypto and fintech companies, further escalating the controversy over "who has the right to control the core gateway to the U.S. payment infrastructure."
The Bank Policy Institute, the Clearing House Association, and the Financial Services Forum laid out detailed arguments in a joint comment letter, calling for a mandatory 12-month waiting period before entities become eligible to apply for payment accounts. These lobbying groups specifically argued that the Fed should not grant system access to newly licensed stablecoin issuers until they can demonstrate safe and sound operations. These arguments could form the basis for escalating the conflict if the dispute moves to the courts.
At the heart of the debate is whether to allow direct access to the Fed's payment "pipes," a privilege long monopolized by the banking system. Currently, crypto and fintech companies still rely on partner banks to gain access to payment rails and compliance infrastructure like anti-money laundering monitoring. The proposed "skinny account" could potentially allow stablecoin issuers and payment companies to bypass bank intermediaries and connect directly to the Fed system.
The banking groups argue that a prerequisite for such accounts should be that applicants have at least 12 months of "successful and safe and sound operations." They noted that the Fed lacks sufficient experience with many potential applicants and also lacks direct supervisory authority over most of them. Furthermore, although the Genius Act was signed into law by the President in July of this year, a specific regulatory framework for stablecoin operators has not yet been fully implemented.
In a joint comment letter submitted on February 6, the Bank Policy Institute, the Clearing House Association, and the Financial Services Forum stated that while the proposal includes some important safeguards for the financial system, it does not necessarily protect against potential runs on newly licensed institutions.
The financial regulatory watchdog group Better Markets warned that the overall momentum may not be on the banks' side. "The Fed's payment account arrangement is highly likely to move forward regardless of objections," Better Markets CEO Dennis Kelleher wrote in a comment. The public comment period closed last Friday.
To preempt these concerns and proactively comply with the forthcoming rules of the Genius Act, a large number of fintech and crypto companies have begun applying for national trust bank charters, with some explicitly stating that their ultimate goal is to apply for a master account with the Federal Reserve.
As early as 2022, the Federal Reserve introduced a tiered review framework to evaluate master account applications. Anchorage Digital Bank, which holds a national trust bank charter, recently applied as a "tier 3" entity, a category typically subject to the strictest scrutiny. The American Bankers Association has argued that master account access should be limited to entities designated as "tier 1," directly supervised by federal banking regulators, and holding federal deposit insurance.
The banking organization also stated that the new payment accounts should not be used as a "stepping stone" to master accounts, which should always be obtained through a separate application process.
Circle and Anchorage, however, believe the proposed "skinny accounts" are too rigid and restrictive in design. For example, the current proposal does not allow account holders access to FedACH, a payment system that processes trillions of dollars in transactions annually. When Fed Governor Christopher Waller first proposed the account concept last year, he said skinny accounts would not offer overdraft protection or access to the discount window for funding. Circle noted in its comment letter that opening FedACH to payment accounts depends on establishing corresponding control mechanisms to prevent overdrafts.
Federal Reserve Governor Christopher Waller at a Federal Reserve Board public meeting in Washington, D.C., U.S., on October 24, 2025. Photographer: Al Drago / Bloomberg.
The Financial Technology Association also criticized the overnight balance cap. Set at $5 billion or 10% of total assets (whichever is lower), the association argued this limit is too harsh for established payment companies that often process tens of billions of dollars in transactions daily.
Anchorage pointed out that if this cap remains, account holders would be forced to sweep excess funds into partner bank accounts overnight at the end of each business day. Anchorage also added that payment account holders should be able to earn interest on their balances in the Fed's reserve accounts.
This debate unfolds alongside another highly sensitive issue: whether crypto trading platforms like Coinbase Global Inc. should be allowed to offer users yield incentives tied to their stablecoin balances. Currently, Coinbase Global Inc. offers a 3.5% yield to users holding USDC. The banking industry believes this practice could "siphon" deposits away from the traditional financial system, threatening bank deposit bases. It is this disagreement that has slowed the progress of related legislation.
It is reported that the White House has intervened to coordinate negotiations and hopes to push for a resolution on this issue by the end of this month.
However, these concerns did not become the central focus of the comments regarding the "skinny account."
Financial stability advocates and banking groups also warned that the proposed accounts exceed the Fed's statutory authority and could pose significant systemic risks.
The financial regulatory group Better Markets stated bluntly in its comment letter: "The proposal itself clearly shows that the Fed is aware that institutions currently and potentially applying for payment accounts pose enormous risks to the Federal Reserve System and the broader financial system. That is precisely why almost the entire proposal revolves around risk mitigation."
