The Federal Reserve Board has released a request for information to initiate the development of a new type of payment account that could benefit cryptocurrency companies seeking to access the Fed's payment pipeline without wanting to face too many regulatory requirements. As the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Fed collectively ease regulations, crypto startups are gradually rising and progressively obtaining more approvals and support.
The Fed is seeking public comments on the new 'payment account'
Federal Reserve Board member Christopher Waller delivered an opening speech at the inaugural 'Payments Innovation Conference' in October, clearly stating that the Fed should 'embrace disruption' and proposed exploring a new type of 'payment account' known as a 'skinny master account.' This limited version of a master account is designed for payment innovators such as fintechs, stablecoin issuers, and cryptocurrency companies, aiming to provide direct access to the Fed's payment system without relying on third-party banks.
Payment accounts are distinctly different from master accounts, as master accounts are currently used by financial institutions to access Federal Reserve payment services. However, the new payment accounts do not pay interest, cannot obtain Federal Reserve credit, and have balance limits. Furthermore, payment accounts do not expand or otherwise change the legal eligibility to use Federal Reserve payment services.
The Federal Reserve will accept public comments for a period of 45 days.
The regulation of crypto startups is gradually relaxing.
The Federal Reserve master account is the channel through which financial institutions directly connect to the central bank's payment system. These accounts are difficult to obtain, which has been a challenge for some cryptocurrency companies. Custodia Bank and PayServices Bank have long sought this privilege but have repeatedly been denied due to regulatory concerns, ultimately resorting to the courts, where federal agencies won both cases.
Federal Reserve Governor Christopher Waller stated in a statement:
"These new payment accounts will support innovation while ensuring the safety of the payment system. This information solicitation is a crucial first step in ensuring that the Federal Reserve can respond to changes in payment methods."
Cynthia Lummis, a Republican senator from Wyoming who supports cryptocurrency, posted on X that
"Streamlined master accounts will facilitate responsible innovation and make payments faster, cheaper, and safer."
She also mentioned the end of 'Operation Chokepoint 2.0,' a prior policy that restricted banking services for cryptocurrency companies, and praised the Federal Reserve's move as "a significant step towards correcting the errors."
The Office of the Comptroller of the Currency (OCC) has conditionally approved the national trust bank license applications of six cryptocurrency-related companies, including Erebor Bank, Circle, and Ripple's subsidiaries. Erebor Bank has also been the first to obtain deposit insurance approved by the Federal Deposit Insurance Corporation (FDIC), which is a significant advancement for crypto startups and further ensures the safety of investors.
(A new milestone for crypto banks: Erebor Bank secures FDIC deposit insurance, giving investors more peace of mind)
This article discusses the Federal Reserve's public solicitation of opinions on the new type of 'payment account,' as the regulation of crypto startups gradually relaxes, first appearing in Chain News ABMedia.
