The U.S. Congress Discusses the Fed's "Skinny Master Account", Evaluating Whether Crypto and Fintech Companies Can Directly Connect to the Central Bank Payment System

Odaily reported that the House Financial Services Committee held a hearing on Wednesday to discuss the evolving roles of banks and fintech companies. A key focus was the "skinny master account" proposal under consideration by the Federal Reserve, which would allow certain crypto banks and fintech companies to have limited direct access to the Fed's payment system.

A master account with the Federal Reserve allows financial institutions to directly use the Fed's payment network and gain the most direct access to the U.S. dollar monetary system. Institutions without such an account typically rely on a partner bank that holds one for services. The so-called "skinny account" is a functionally restricted version, intended to provide limited access for new types of financial institutions.

Republican Representative Dan Meuser stated at the hearing that access to the Federal Reserve payment system is not a trivial matter, and the core question is which institutions should be allowed to directly use these critical payment rails. Traditional institutions like community banks worry that crypto and fintech companies are not subject to the same rigorous regulatory standards, and direct access could introduce safety and soundness risks.

The crypto industry generally supports the proposal, arguing that direct access to the Federal Reserve payment system is long overdue, helping to reduce reliance on intermediary banks and fostering innovation. In May, President Trump signed an executive order requiring the Fed to evaluate policies for opening central bank payment rails to fintech companies, including crypto firms.

Previously, the Kansas City Fed approved in March a "limited purpose account" for Kraken's parent company, Payward, sparking debate over the extent to which crypto and fintech companies should have direct access to Fed services. A representative from Anchorage Digital stated at the hearing that if the U.S. wants to remain a global financial center, it needs to allow for innovative federal and state-level regulatory frameworks.