WASHINGTON—The Federal Reserve has moved closer to opening its payment infrastructure to financial technology and crypto firms, advancing a proposal for a new type of limited “payment account” that would allow eligible nontraditional financial institutions to directly access certain Fed payment rails without receiving the full privileges available to banks, Reuters reported.
Under the proposal, the accounts would permit firms to clear and settle payments directly through Federal Reserve systems while barring access to traditional banking backstops such as the Fed’s discount window, intraday credit and interest on reserve balances. The Fed also said regional Reserve Banks should pause pending applications for full master accounts from nontraditional firms while policymakers work toward a more uniform framework, Reuters said.
The move follows mounting pressure from fintech and cryptocurrency companies seeking direct access to the central bank’s payment rails, which currently are largely available only through traditional bank master accounts. Reuters reported the Fed’s proposal comes just days after President Donald Trump signed an executive order directing regulators to review whether policies governing payment-system access are stifling financial innovation and whether broader fintech access should be considered.
The proposal has already sparked debate across the financial industry. Supporters argue direct Fed access could lower transaction costs, speed payments and reduce reliance on intermediary banks, particularly for firms involved in real-time payments and digital assets. Banking groups have urged the Fed to impose strong safeguards, warning that expanding access to lightly regulated firms could introduce operational, liquidity and anti-money-laundering risks into the U.S. payments system. Fed Governor Michael Barr reportedly dissented from the latest proposal, citing concerns over illicit-finance risks and insufficient safeguards.