Federal Reserve Proposes "Skinny Master Accounts" for Stablecoin Issuers

The Federal Reserve is considering giving stablecoin issuers and fintech companies direct access to its payment infrastructure through a new “skinny master account” system. Fed Governor Christopher Waller unveiled the proposal during the central bank’s inaugural Payments Innovation Conference on October 21, signaling a dramatic shift in how regulators view the crypto industry.

The announcement marks a historic turning point. Just two years ago, the Fed routinely denied crypto companies access to master accounts, citing risk concerns. Now, the central bank is actively designing frameworks to bring these firms into the traditional financial system.

What Are Master Accounts

Master accounts function like having a bank account directly with the Federal Reserve. Institutions with these accounts can hold reserves at the central bank and settle transactions instantly through Fed payment rails like FedWire and FedNow.

For crypto firms, master account access would eliminate the need for banking intermediaries. Companies like Circle, Ripple, and other stablecoin issuers currently must partner with traditional banks to access the payment system. This adds costs, delays, and counterparty risk to crypto payments for business operations.

Waller emphasized that distributed ledgers and stablecoins are now woven into the fabric of the payment and financial systems. The Fed wants to support firms actively transforming the payment system rather than viewing them with suspicion.

How Skinny Accounts Would Work

The proposed skinny master accounts would provide limited access compared to full master accounts held by banks. Waller outlined several restrictions designed to control risks to the Fed’s balance sheet.

These accounts would not pay interest on balances, removing any incentive for firms to park large sums at the Fed. Balance caps may be imposed to limit deposit sizes. The accounts would not include daylight overdraft privileges, meaning if the balance hits zero, payments get rejected immediately.

Firms would not have access to the Fed’s discount window for emergency borrowing. They also would not receive access to Fed payment services, where the central bank cannot adequately control overdraft risks.

This integrates stablecoin issuers into the U.S. monetary system while maintaining safeguards. Users could benefit from improved digital wallet infrastructure and faster settlements when using crypto debit card services.

Who Would Benefit

Stablecoin issuers stand to gain the most from this development. Companies like Circle and Paxos have been seeking direct Fed access for years. Ripple recently applied for a master account through its Standard Custody acquisition.

The GENIUS Act, signed into law in July 2025, established a federal framework for stablecoin regulation but did not grant issuers direct Fed access. The skinny master account proposal would fill this gap, allowing compliant stablecoin companies to bypass traditional banking partners.

Waller clarified that these accounts would only be available to firms holding national trust charters or Special Purpose Depository Institution status in Wyoming. This requirement ensures applicants meet baseline regulatory standards before accessing Fed infrastructure.

For businesses exploring digital payment solutions, this development could accelerate institutional adoption. Direct Fed access would make stablecoin payments faster, cheaper, and more reliable for corporate treasury operations.

Market Reaction

Crypto industry leaders welcomed the announcement enthusiastically. Nathan McCauley, CEO of Anchorage Digital, stated the proposal “will enable a whole host of opportunities to further the U.S. as the leader in payments and stablecoins.”

Caitlin Long, founder of Custodia Bank, praised Governor Waller’s pivot after her firm spent five years attempting to secure Fed access. Rob Hadick, General Partner at Dragonfly, suggested the move would make adoption of tokenized assets inevitable.

Stablecoin payment volumes reached $19.4 billion year-to-date in 2025, demonstrating growing sector importance. This surge in activity has driven increased interest in crypto markets overall, with investors closely monitoring crypto prices today for market reactions.

Caitlin Long reacting to the Federal Reserve’s proposal for “skinny master accounts” for stablecoin issuers. Source: X (formerly Twitter).

Regulatory Context

The proposal emerges amid a broader regulatory shift toward crypto. The Biden administration previously discouraged banks from supporting digital assets. By April 2025, most anti-crypto directives had been rolled back.

The Fed has withdrawn guidance that previously prevented banks from crypto and stablecoin activities. It also removed “reputational risk” from its examination program for banks. Waller’s proposal represents the Fed embracing its role in the payment revolution. He acknowledged that most innovation comes from the private sector but emphasized the central bank intends to be an active participant.

Major payment companies like Visa, Mastercard, and Stripe have begun integrating stablecoins. Banks are exploring tokenization for securities and deposits.

For individuals managing digital asset portfolios, increased Fed involvement could improve the stability and legitimacy of digital asset infrastructure.

Questions and Concerns

Despite enthusiasm, important questions remain unanswered. The Fed has not specified a timeline for implementation or detailed application criteria beyond the trust charter requirement. Waller emphasized that the proposal is a “prototype idea” subject to stakeholder feedback.

One contentious issue involves stablecoin interest payments. The GENIUS Act prohibits stablecoin issuers from offering yield to customers. However, platforms like Coinbase argue they can offer “rewards” to users for holding stablecoins.

Waller suggested this distinction “skirts the spirit of the law.” He described stablecoins as “pure payment instruments” rather than time deposits meant to earn interest. This regulatory ambiguity may require Congressional clarification.

Banks have expressed concerns that higher rates offered through stablecoin rewards could trigger deposit withdrawals, impacting their ability to lend money in local communities.

Global Context

The U.S. approach differs from other major economies. The UK and EU have comprehensive frameworks for payment providers like e-money institutions. These jurisdictions created regulatory pathways for non-bank payment firms years ago.

The U.S. lacks a federal payments charter, forcing innovators to navigate 50 state money transmitter laws or rely on bank partnerships. This gap pushed innovation toward stablecoins and crypto-based payment systems.

Now, the Fed is adapting its infrastructure to accommodate these developments rather than forcing them into outdated frameworks. This could benefit platforms offering fiat-to-crypto conversion services.

Looking Ahead

Waller stated the Fed will “engage with all interested stakeholders” as staff explore the concept. The industry should expect more detailed proposals shortly as research progresses.

Implementation would represent the most significant regulatory development for crypto payments since the GENIUS Act. It could accelerate stablecoin adoption, reduce cross-border transaction costs, and legitimize crypto firms within traditional finance.

The proposal raises questions about the Fed’s role in digital currency. Waller has expressed skepticism about retail central bank digital currencies. His approach suggests a middle path where private sector innovation operates on Fed settlement infrastructure.

Whether other central banks follow this model remains uncertain. The Federal Reserve’s decision to embrace rather than resist crypto payments innovation could influence global regulatory approaches to digital assets.