US Banks Demand 1-Year “Cooling-Off” Period to Block Crypto’s Fed Access
A powerful banking coalition has formally urged the Fed to impose a 12-month moratorium on master account applications for crypto firms, escalating the war for payment rails.
The Incumbents Strike Back
The battle for the rails of the U.S. financial system just got ugly. A coalition of the nation’s most powerful banking lobbies. The Bank Policy Institute (BPI), The Clearing House Association, and the Financial Services Forum filed a joint comment letter today urging the Federal Reserve to slam the brakes on direct payment access for crypto and fintech firms.
The group is demanding a mandatory 12-month waiting period before any newly licensed stablecoin issuer or payment firm can even apply for a Federal Reserve master account. Their argument? Regulators need a “safety” buffer to verify these firms can operate without blowing up the plumbing of the U.S. dollar.
Ripple (XRP), which has long sought direct access to cut out correspondent banking middlemen, slid 3% to $1.45 on the news. Coinbase (COIN), whose custody arm is a pillar of the stablecoin market, traded flat at $167.
The “Skinny” Account Battleground
This filing is a direct counter-attack to Fed Governor Christopher Waller’s October proposal for “skinny” master accounts. Waller’s framework was designed to offer non-banks access to Fedwire and FedNow without the full privileges (like the discount window) of a chartered bank.
While fintechs argue this tiering is essential for competition, banks view it as an existential threat to their deposit moats.
“Everyone is yelling at me,” Waller noted earlier today, referencing the flood of opposing comments from Silicon Valley and Wall Street.
Why It Matters
Access to a master account is the difference between being a customer and being a peer in the global financial system. Without it, stablecoin issuers like Circle (USDC) must rely on commercial banks to settle transactions, introducing counterparty risk and fees. A 12-month delay, on top of the years-long application process that firms like Custodia Bank have already endured, is effectively a pocket veto on crypto’s integration into traditional finance.
If the Fed adopts the BPI’s recommendation, the “skinny” account pathway could remain a theoretical bridge that no crypto firm is allowed to cross until late 2027.
