US Congress Discusses Fed’s “Skinny Master Account” to Evaluate Whether Crypto and Fintech Companies Can Directly Connect to the Central Bank Payment System

Odaily Odaily News The U.S. House Financial Services Committee held a hearing on Wednesday to discuss the changing roles of banks and fintech companies, with a key focus being the "skinny master account" plan under consideration by the Federal Reserve, which would allow certain crypto banks and fintech companies limited direct access to the Fed's payment system.

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

Republican Representative Dan Meuser stated at the hearing that access to the Fed's payment system is no small matter, and the core issue 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 equally stringent regulation, and direct access could introduce safety and soundness risks.

The crypto industry generally supports the proposal, believing that direct access to the Fed's payment system should have been opened long ago, helping to reduce reliance on intermediary banks and promote innovation. In May, Trump also signed an executive order requiring the Federal Reserve to assess policies for opening central bank payment rails to fintech companies, including crypto firms.

Previously, in March, the Kansas City Fed approved Kraken's parent company, Payward, for a "limited purpose account," sparking debate over how much direct access to Fed services crypto and fintech companies should have. An Anchorage Digital representative 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.