The Federal Reserve is constructing a new category of central bank access — the "payment account" — designed to give crypto firms and non-bank fintechs limited, direct access to Fedwire and the Fed's payment infrastructure. The proposal, revised and reopened for a 60-day comment period on May 20,...
"The goal here, assuming nothing goes haywire, is to have these up and operationalized by the fourth quarter of 2026. So we're moving at startup speed on this — we're not screwing around like federal regulators." — Christopher Waller, Federal Reserve Board Governor
The Federal Reserve is constructing a new category of central bank access — the "payment account" — designed to give crypto firms and non-bank fintechs limited, direct access to Fedwire and the Fed's payment infrastructure. The proposal, revised and reopened for a 60-day comment period on May 20, 2026, follows a Trump executive order signed May 19 that directed all federal financial regulators to identify and remove barriers preventing fintech firms from accessing the U.S. payments system. The overnight balance cap was raised from $500 million to $1 billion between the December 2025 prototype and the May 2026 revision.
The policy shift comes after Kraken Financial, a Wyoming Special Purpose Depository Institution, became the first crypto-native firm to receive a Fed master account on March 4, 2026, following a five-year application process. The Fed has simultaneously paused all new Tier 3 master account decisions through December 2026, consolidating authority at the Board level to prevent divergent regional outcomes. Ripple, Anchorage Digital, Circle, and Wise are among firms in the applicant pipeline. Community banks, represented by the Independent Community Bankers of America, have filed formal opposition.
This is the most significant structural change to Federal Reserve payment access in decades. Whether it results in a handful of constrained settlement accounts or a broad new tier of central bank participants will depend on the final rule, expected before year-end.
President Trump signed the executive order "Integrating Financial Technology Innovation into Regulatory Frameworks" on May 19, 2026. The order contains three principal directives:
90-Day Regulatory Audit. The SEC, CFTC, OCC, and other federal financial agencies must identify existing rules, guidance, and interpretations that "unduly impede" fintech firms from partnering with federally regulated institutions. Agencies have three months to produce findings and six months to act on them.
Fed Master Account Review. The Federal Reserve Board of Governors must conduct a "comprehensive evaluation" of the legal and policy framework governing access to Reserve Bank payment accounts and services by uninsured depository institutions and non-bank financial companies. The order urges the Fed to establish "transparent application procedures" and make decisions within 90 days of completed applications.
FedNow and Fedwire Access. The order explicitly references Fedwire and FedNow, the Fed's real-time gross settlement and instant payments systems respectively. The directive covers access to all Fed payment rails, not just legacy wire transfers.
The White House fact sheet states the policy of the United States is to "streamline regulatory processes, reduce unnecessary barriers to entry, and encourage collaboration between fintech firms, federally regulated financial institutions, and Federal financial regulators."
The order lacks enforcement mechanisms. It cannot compel the Federal Reserve, an independent agency, to change its policies. However, it establishes a clear political mandate and accelerates timelines that the Fed was already pursuing.
The Federal Reserve published its revised payment account proposal on May 20, 2026 — one day after the executive order. The Board characterized the timing as coincidental, noting the proposal had been in development since late 2024.
What the account includes:
What the account excludes:
Balance Caps. The December 2025 prototype set an overnight balance limit at the lesser of $500 million or 10% of total assets. The May 2026 revision raised this to a flat cap of $1 billion, responding to industry feedback that the original limit was too restrictive for firms processing high daily volumes.
Eligibility. As Governor Waller clarified: "You've got to be an eligible depository institution." Pure fintechs without any form of bank charter — state or federal — cannot apply. This narrows the pool to entities like Wyoming SPDIs, OCC-chartered national trust banks, and similar structures.
Three-Tier Framework. The Fed operates a tiered access model. Tier 1 institutions (FDIC-insured, fully regulated) receive full services. Tier 2 institutions receive standard access with additional oversight. Tier 3 institutions (including crypto-focused banks) face the most restrictive terms. Waller described it as: "If you're a tier one bank... you get the gold medal. And if you're a little farther down the chain, you might get a silver medal. And if you're a tier three... you get the bronze. But you get a medal."
The 60-day comment period is open. The Fed has paused all new Tier 3 master account decisions through December 31, 2026, while it finalizes the national framework — preventing regional Reserve Banks from making independent, potentially inconsistent decisions.
The Federal Reserve Bank of Kansas City granted Kraken Financial a master account on March 4, 2026. The approval was the first of its kind for a crypto-native institution and came after a five-year application process — Kraken filed in October 2020.
Kraken Financial operates as a Wyoming SPDI, chartered under legislation Wyoming passed in 2019 (House Bill 74 and Senate File 125). As a full-reserve institution, it holds liquid assets equal to or exceeding 100% of client fiat deposits. It does not engage in fractional-reserve lending.
The account is limited:
According to PYMNTS.com, the approval represents the largest test of the SPDI bank model to date. It enables Kraken Financial to settle dollar payments directly through Fedwire without routing through intermediary banks — eliminating a layer of cost and counterparty risk.
Custodia Bank, also a Wyoming SPDI founded by Caitlin Long, pursued a Fed master account through litigation after its application stalled. The outcome illustrates the limits of legal compulsion.
The Fed denied Custodia's master account and membership applications, citing: reliance on volatile crypto markets, insufficient risk controls, limited traditional banking experience, and potential systemic risks.
Custodia sued the Federal Reserve Board of Governors and the Federal Reserve Bank of Kansas City. On March 13, 2026 — nine days after Kraken's approval — the U.S. Court of Appeals for the 10th Circuit denied Custodia's petition for en banc rehearing in a 7-3 vote. The ruling affirmed that Reserve Banks retain discretion over whether to grant master accounts.
Judge Timothy Tymkovich's dissent warned that denying master accounts can be "akin to a death sentence" for banks, severely limiting operations without direct Fed access.
Custodia may petition the Supreme Court for certiorari. Alternatively, it could reapply through the new payment account framework — a path that did not exist when it filed suit in 2022.
Multiple firms are pursuing Fed payment access through various charter structures:
| Firm | Charter Type | Status | |------|-------------|--------| | Kraken Financial | Wyoming SPDI | Master account approved (March 2026) | | Ripple | OCC National Trust Bank (conditional, Dec 2025) | Master account application pending | | Anchorage Digital | OCC National Bank (2021) | Master account application filed (Aug 2025) | | Circle | OCC National Trust Bank (conditional, Dec 2025) | Application expected | | Wise | OCC National Trust (applied June 2025) | Charter pending |
The OCC granted conditional approvals for national trust bank charters to at least five firms in December 2025, with at least three more in early 2026. Each of these is a potential applicant for payment account access once the Fed finalizes its framework.
The pipeline represents a structural shift. These are not speculative startups. Ripple processed cross-border settlement volumes through its existing network. Circle manages USDC, the second-largest stablecoin by market capitalization. Anchorage Digital has operated as an OCC-chartered national bank since 2021.
Opposition from the traditional banking sector has been immediate and organized.
The Independent Community Bankers of America said there are "significant gaps in regulation" between banks and non-bank entities, and called for "like activities" to be subject to "like regulation." ICBA CEO Rebecca Romero Rainey raised concerns that the payment account framework lacks sufficient guardrails and could weaken consumer protections.
The Colorado Bankers Association, representing more than 126 banks and over 20,000 banking professionals, filed comments raising safety concerns about the proposal.
The Bank Policy Institute, representing the largest U.S. banks, has consistently argued that master account access should remain limited to institutions subject to comprehensive federal supervision.
Core objections center on three points:
Prudential asymmetry. Payment account holders would not face the same capital requirements, stress testing, or resolution planning as FDIC-insured banks, yet would settle in the same central bank money.
Liquidity risk. Without deposit insurance, a run on a crypto-native bank could require rapid liquidation of reserve assets. The $1 billion balance cap limits but does not eliminate this risk.
Competitive distortion. Direct Fed access reduces the need for intermediary banks, potentially disintermediating the correspondent banking relationships that community banks rely on.
Consumer advocacy organizations have separately objected, characterizing the executive order as a "sweeping deregulation initiative" that could accelerate expansion of crypto-related financial risk.
The payment account framework, if finalized, affects the economic value chain at several points:
Settlement cost reduction. Firms currently route dollar payments through intermediary banks, paying fees at each step. Direct Fedwire access eliminates one or more intermediary layers. For a stablecoin issuer processing billions in daily redemptions, the savings are material.
Counterparty risk reduction. Settlement in central bank money eliminates the credit risk inherent in commercial bank deposits. This matters for institutions managing large reserve portfolios — Circle's USDC reserves, for instance, depend on dollar settlement speed and safety.
Competitive dynamics. Fedwire processes trillions of dollars daily across approximately 10,000 participants. Adding a new category of participants — even with restrictive terms — changes the competitive landscape for payment processing, stablecoin redemption, and cross-border settlement.
Structural dependency shift. Currently, crypto firms depend on a small number of banking partners willing to serve the sector. The "debanking" problem — where banks refuse to serve crypto clients — has been a persistent bottleneck. Direct Fed access reduces this dependency, though it does not eliminate the need for banking relationships entirely.
The $1 billion overnight balance cap constrains the scale at which these accounts can operate. For context, Circle's USDC reserves alone exceed $30 billion. The cap forces holders to sweep excess balances to partner banks or Treasury holdings daily — preserving some role for traditional banking intermediaries.
The Trump executive order (May 19, 2026) directs all federal financial regulators to audit and remove barriers to fintech/crypto access to payment rails within 3-6 months. The order lacks enforcement mechanisms over the independent Fed but establishes a political mandate.
The Fed's revised payment account proposal (May 20, 2026) offers limited Fedwire access with no interest, no lending, no intraday credit, and a $1 billion overnight balance cap — raised from $500 million in the December 2025 draft.
Kraken Financial is the only crypto-native firm with an active Fed master account, approved March 4, 2026, after a five-year process. The account is limited to a one-year term.
Custodia Bank's legal challenge ended on March 13, 2026, when the 10th Circuit denied rehearing 7-3, affirming the Fed's discretion to deny access.
At least five firms — Ripple, Anchorage Digital, Circle, Wise, and others with OCC trust charters — are in the pipeline for payment account access.
All new Tier 3 master account decisions are paused through December 31, 2026, pending finalization of the national framework. Governor Waller targets Q4 2026 for operational accounts.
The banking industry opposes the framework on grounds of prudential asymmetry, liquidity risk, and competitive distortion. The 60-day comment period is open.
The convergence of the Trump executive order and the Fed's payment account proposal represents the most significant reconfiguration of U.S. payment system access since the Monetary Control Act of 1980 extended Fed services to non-member banks. The question is no longer whether crypto firms will access the Fed's payment rails, but under what constraints.
The payment account framework is deliberately restrictive — no interest, no lending, no intraday credit, hard balance caps. It is designed to provide settlement utility without conferring the full privileges (or protections) of traditional bank membership. Whether these constraints prove durable under political pressure and industry lobbying remains an open question.
The practical effect of these accounts depends on finalization details: the exact balance cap structure, the frequency of compliance reviews, the treatment of stablecoin reserves, and whether the framework extends beyond Fedwire to include FedNow. The 60-day comment period and the December 2026 pause on Tier 3 decisions set the timeline. Markets and institutions should plan accordingly.