Who will win the battle for the Federal Reserve's payment gateway?

Editor's Note: The access rules for the U.S. payment system are at a critical juncture. The banking industry hopes 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 directly access 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 who has the right to directly enter the core of the U.S. payment infrastructure.

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The banking industry has formally expressed 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 presented detailed arguments in a joint comment letter, demanding a mandatory 12-month waiting period before companies are eligible to apply for payment accounts. Among these, the lobbying groups specifically argued that the Fed should not grant system access to newly licensed stablecoin issuers until they can demonstrate safe and sound operation. If the dispute moves to judicial proceedings, these arguments could form the basis for further escalation.

The core of the controversy lies in whether to allow direct access to the Fed's payment "pipeline," a privilege long monopolized by the banking system. Currently, crypto and fintech companies still need to rely on partner banks to obtain compliance infrastructure support such as payment access and anti-money laundering monitoring. The so-called "skinny account" proposal could potentially allow stablecoin issuers and payment companies to bypass bank intermediaries and directly access the Fed system.

Banking groups believe the prerequisite for such accounts should be that applicants have at least 12 months of "successful and safe and sound operating history." They point out that the Fed lacks sufficient experience with many potential applicants and also does not have direct supervisory authority over most of these institutions. Furthermore, although the "Genius Act" was signed into law by the President in July this year, the 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 although the proposal sets up some important safeguards for the financial system, it does not necessarily guard against the risk of runs that newly licensed institutions might face.

The financial regulatory watchdog group Better Markets warned that the overall momentum may not be on the banks' side. Better Markets CEO Dennis Kelleher wrote in a comment, "The Fed's arrangement to provide payment accounts is highly likely to move forward regardless of opposition." The public comment period closed last Friday.

To preemptively address these concerns and proactively comply with the upcoming 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 access to the Fed's master account.

As early as 2022, the Fed introduced a tiered review framework to evaluate master account applications. Anchorage Digital Bank, which holds a national trust bank charter, recently submitted an application as a "tier 3" entity, a category that typically implies the most stringent review standards. The American Bankers Association argues that master account access should be limited to institutions designated as "tier 1," directly supervised by federal banking regulators, and holding federal deposit insurance.

The banking organization also noted that new payment accounts should not be used as a "stepping stone" to master accounts, which should always be obtained through an independent application process.

Circle and Anchorage believe that the proposed "skinny accounts" are too rigid and restrictive in design. For example, the current proposal does not allow account holders to access 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 stated that skinny accounts would not offer overdraft privileges or access to discount window funding. Circle noted in its comment letter that whether to open FedACH to payment accounts depends on the ability to establish corresponding control mechanisms to prevent overdrafts.

Federal Reserve Governor Christopher Waller at a Federal Reserve Board public meeting in Washington, D.C., on October 24, 2025. Photo: Al Drago / Bloomberg.

The Financial Technology Association also criticized the overnight balance cap. Set at $500 million or 10% of total assets (whichever is lower), the association believes this limit is too harsh for established payment companies, as such institutions often process tens of billions of dollars in daily transaction volume.

Anchorage pointed out that if this cap remains, account holders would have to sweep excess funds into partner bank accounts overnight at the end of each trading day. Anchorage also added that payment account holders should be able to earn interest on their balances in Fed reserve accounts.

This debate unfolds alongside another highly sensitive issue: whether crypto trading platforms like Coinbase Global Inc. should be allowed to offer yield incentives tied to users' stablecoin balances. Currently, Coinbase Global Inc. offers a 3.5% yield to its USDC balance users. 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 stepped in to mediate negotiations and hopes to push for a resolution to this issue by the end of this month.

However, these concerns have not been the central focus of discussion in the comment letters regarding "skinny accounts."

Financial stability advocates and banking groups have also warned that the proposed accounts exceed the Fed's statutory authority and could pose significant systemic risks.

Financial regulatory group Better Markets bluntly stated in its comment letter: "The proposal itself makes clear that the Fed is aware that the institutions that are, and will be, applying for access to payment accounts pose enormous risks to the Fed system and the financial system as a whole. That is why almost the entire proposal is about risk mitigation."