Fed Formalizes ‘Payment Accounts’ Plan; A Potential Lifeline for Stablecoin Issuers

The Federal Reserve moved from rhetoric to regulation Friday, opening a 45-day comment period on a new framework for “Payment Accounts.” The proposal, heavily championed by Governor Christopher Waller, offers a compromise for fintechs and crypto firms previously locked out of the central bank’s master account system.

The ‘Skinny’ Account Structure

Detailed in a Request for Information (RFI), the proposed accounts grant direct access to Fed rails (Fedwire, FedNow) without the full privileges of a traditional master account. This solves a critical bottleneck for non-bank payment providers that currently rely on intermediary banks for settlement.

However, the access comes with strict guardrails designed to insulate the Fed’s balance sheet from risk:

• No Interest: Balances held in payment accounts will earn 0% interest.
• No Overdrafts: The Fed explicitly barred “daylight overdraft” privileges; payments will be rejected immediately if the account hits zero.
• No Discount Window: Firms cannot borrow from the Fed in liquidity crunches.
• Balance Caps: The Reserve Banks retain the right to cap total holdings.

“Payments innovation moves fast, and the Federal Reserve needs to keep up,” Governor Waller noted, positioning the framework as a way to “support innovation while keeping the payments system safe.”

Breaking the Master Account Deadlock

This RFI signals a strategic pivot after years of litigation and stagnation regarding crypto firms’ access to the Fed. By creating what Waller previously termed a “bronze medal” tier for eligible depository institutions, the Fed creates a pathway for stablecoin issuers and novel charters to clear transactions directly.

While this does not automatically grant access to non-depository fintechs (state-chartered trust banks remain the primary target), it effectively bypasses the “all-or-nothing” standoff that defined the Custodia Bank lawsuit. The Fed is specifically seeking feedback on whether these restricted accounts would sufficiently support the business models of payment-focused institutions.

The public has 45 days to comment. If adopted, the framework would operationalize by late 2026.