Federal Reserve Governor Christopher Waller proposed a brand new cost account on Oct. 21 that might grant stablecoin issuers and crypto corporations direct entry to Fed cost rails with out full grasp account privileges.
The announcement on the Fed’s inaugural Funds Innovation Convention marked a reversal from the central financial institution’s guarded stance towards digital asset corporations.
Waller described the idea as a “skinny” grasp account offering primary Fedwire and ACH connectivity whereas stripping out curiosity funds, overdraft services, and emergency lending. The brand new account creates a payments-only door that might reshape how stablecoin issuers settle greenback flows.
The account would carry steadiness caps, pay no curiosity, provide no daylight overdrafts, and exclude low cost window borrowing.
Companies pursuing full grasp accounts, corresponding to Custodia Financial institution, Kraken, Ripple, and Anchorage Digital, may benefit from quicker approval timelines.
The convention assembled roughly 100 personal sector innovators in what Waller framed as a brand new period through which “the DeFi trade shouldn’t be seen with suspicion or scorn” however is “to the dialog on the way forward for funds.”
Slender banking and stablecoin construction
The cost account revives slim banking, separating funds from credit score creation.
Stablecoin issuers already function as de facto slim banks, holding backed reserves and shifting cash with out lending, however lack direct Fed entry and should accomplice with business banks to redeem tokens.
Waller’s proposal would let qualifying corporations maintain reserves immediately with the Fed, again tokens with central financial institution cash, and remove friction between banks and companions that creates bottlenecks throughout stress.
Direct Fed entry would place compliant US stablecoins nearer to slim cash, decreasing bank-run threat.
If reserves sit on the Fed moderately than business financial institution deposits, tokens change into claims on central financial institution liabilities, eliminating credit score threat.
Caitlin Lengthy, CEO of Custodia Financial institution, framed the shift as correcting “the horrible mistake the Fed made in blocking payments-only banks from Fed grasp accounts.”
Operational enhancements and trade-offs
Redemption flows could be extra environment friendly if issuers posted and acquired funds immediately moderately than routing them by accomplice banks.
The development is mechanical, with fewer steps, decrease latency, decreased dependency on financial institution hours, however materials throughout heavy flows when redemption queues lengthen.
Issuers redeeming into accomplice accounts and initiating wires might full each legs with Fed rails, compressing settlement from hours to close real-time and eradicating the danger {that a} accomplice financial institution freezes transfers.
Steadiness caps will decide utility for giant issuers. Tether holds reserves within the tens of billions. Strict caps would possibly accommodate operational liquidity however not the entire base, forcing a break up of reserves.
The Fed’s objectives, that are controlling steadiness sheet affect and limiting credit score publicity, will form caps, and issuers will weigh direct Fed entry for a slice of reserves versus holding every part with business banks.
Ripple CEO Brad Garlinghouse argued practically one week earlier than Waller’s speech that crypto corporations that meet banking-grade AML and KYC requirements ought to obtain banking-grade entry to infrastructure, as CoinDesk reported.
Ripple filed a grasp account utility in 2025. Direct Fed entry would permit Ripple to settle greenback legs of cross-border transactions with out utilizing correspondent banks.
The logic applies to exchanges and custodians that depend on financial institution companions for fiat rails, direct Fed connectivity removes a dependency and a choke level.
Arthur Hayes, co-founder of BitMEX, provided a skeptical take:
“Think about if Tether didn’t must depend on a TradFi financial institution for its existence. The Fed is shifting to destroy business banking within the US.”
The priority is disintermediation. If giant issuers and cost processors entry Fed rails immediately, they not want business banks for primary companies, eroding deposit bases whereas concentrating liquidity on the Fed.
The restrictions Waller outlined, corresponding to no curiosity, steadiness caps, and no overdrafts, purpose to string the needle to help funds innovation with out making the Fed the first deposit taker or assuming credit score threat on nonbanks.
Right here’s what modifications
Waller directed Fed employees to assemble stakeholder suggestions, however didn’t specify a timeline.
The GENIUS Act, signed into regulation in July 2025, established federal stablecoin necessities however didn’t grant direct Fed entry.
Waller’s proposal fills that hole. Companies with pending purposes might see quicker selections. Banks with cost subsidiaries might apply first, whereas crypto-native fintechs comply with as soon as the framework solidifies.
The cost account formalizes crypto’s entry into Fed-supervised infrastructure. If main issuers acquire Fed accounts, the affect on liquidity and settlement high quality turns into systemic.
Fed-backed reserves can’t be frozen by a business financial institution or topic to intermediate establishment credit score threat, compressing settlement threat throughout stress.
Regulatory arbitrage narrows as offshore issuers or these unwilling to fulfill GENIUS Act requirements lose floor to US-regulated issuers providing Fed-backed tokens with structural security benefits, consolidating market share amongst compliant corporations.
Waller’s proposal opens a payment-only door into the Fed beneath steadiness caps and tight restrictions, revives slim banking, positions compliant stablecoins as central bank-backed devices, and creates a stage taking part in subject whereas disintermediating some business financial institution companies.
The coverage shift integrates crypto into the funds system beneath supervision, with direct settlement decreasing fragility and recognizing that digital asset infrastructure has moved from the fringes to the core of how {dollars} transfer.
