The Federal Reserve eyes a more open payment system, and crypto firms could be among the biggest winners.
The United States Federal Reserve is exploring a new form of account designed to make its payment infrastructure more accessible to smaller financial players, including fintech and crypto firms. The move could signal the end of the crypto sector’s long-standing struggle to access traditional banking rails, often referred to as “Operation Chokepoint 2.0.”
The proposal, dubbed “payment accounts” or “skinny master accounts,” would allow legally eligible institutions, not just large commercial banks, to access the Fed’s core payment services directly.
Waller: “We can and should do more to support innovation.”
Federal Reserve Governor Christopher J. Waller unveiled the concept during his speech at the Payments Innovation Conference on Tuesday, emphasizing the Fed’s responsibility to foster innovation within the financial system.
“I believe we can and should do more to support those actively transforming the payment system,”
said Waller.
“To that end, I have asked Federal Reserve staff to explore the idea of what I am calling a ‘payment account.’”
Under current rules, only major banks and financial institutions can access the Fed’s “master accounts,” the gateway to the nation’s payment system. Smaller institutions, such as fintech startups or digital asset service providers, must rely on intermediary banks to process transactions.
These new “payment accounts” would offer limited or “skinny” access to the Fed’s rails while incorporating safeguards to manage potential risks to the central bank and the wider financial system.
Waller added that the initiative remains exploratory but represents a growing effort to integrate innovative payment providers, including crypto companies, into the broader TradFi (traditional finance) ecosystem.
A breakthrough for crypto after “Operation Chokepoint 2.0”
Industry insiders have greeted the announcement as a potential turning point for crypto banking access in the U.S.
For years, digital asset companies have faced de-risking measures from major banks, leading to frozen accounts and rejected applications. The trend intensified under the Biden administration, when several crypto-focused firms alleged they had been deliberately excluded from the banking system, a situation some described as “Operation Chokepoint 2.0.”
According to reports, at least 30 technology and crypto entrepreneurs were denied banking access during that period.
One of the most vocal supporters of the Fed’s new direction has been Caitlin Long, founder and CEO of Custodia Bank, which previously struggled to obtain a Fed master account.
“THANK YOU, Gov Waller, for realizing the terrible mistake the Fed made in blocking payments-only banks from Fed master accounts,”
Long wrote on X.
“The Fed told courts that such firms would put financial stability at risk for being inherently unsafe and unsound. Thank you for admitting that’s not true it never was true!”
Long’s response reflects widespread optimism within the digital asset community that the Fed is now reconsidering its stance on payment access for crypto firms.
The issue gained prominence in 2023 following the collapse of several crypto-friendly banks, including Signature Bank and Silvergate Bank, which fueled accusations that regulators were pushing banks to sever ties with the crypto sector. Venture capitalist Nic Carter was among those who described the situation as a “coordinated effort” against the industry.
The Fed’s quiet exploration of blockchain, tokenization, and AI
While the “skinny account” proposal is gaining attention, it is not the only area where the Federal Reserve is dipping its toes into innovation.
Governor Waller revealed that the central bank has already been conducting hands-on research into cutting-edge technologies like tokenization, smart contracts, and AI-driven payment systems.
“We are also looking ahead, conducting hands-on research on tokenization, smart contracts, and the intersection of AI and payments for use in our own payment systems,”
said Waller.
“We do this to understand the innovation happening within the payment system as well as to evaluate whether these technologies could provide opportunities to upgrade our own payment infrastructures.”
These initiatives underscore a broader trend among global central banks to modernize their payment systems, often inspired by innovations emerging from the crypto and decentralized finance (DeFi) sectors.
What “skinny” payment accounts could mean for fintech and crypto
If approved, the proposed payment accounts could drastically reshape how financial startups, including digital asset platforms, interact with the U.S. banking system. Here’s how:
Fintech Startups: Easier, more direct access to the Fed’s payment system, reducing dependence on large intermediary banks.
Crypto Firms: Restoration of direct payment access, reducing debanking risks and improving liquidity management.
Traditional Banks: May face competition from fintechs but could also gain new partnership opportunities.
Regulators: Improved oversight of non-bank payment entities operating within a regulated framework.
By giving smaller institutions access to the Fed’s rails under controlled conditions, the “skinny account” approach could level the playing field and foster more competition and innovation across the U.S. financial landscape.
A cautious but significant step
Although the concept remains in its early stages, the proposal highlights a major philosophical shift within the Federal Reserve.
Rather than resisting crypto-related innovation, the central bank appears to be taking a pragmatic approach, acknowledging that digital assets and blockchain-based systems will play a growing role in the future of money movement.
The “skinny” payment account framework could thus represent a middle ground granting access without compromising systemic safety. It could also act as a testing ground for how decentralized technologies might coexist with central banking infrastructure.
As the Fed continues exploring blockchain applications, tokenized payments, and AI-enhanced transaction systems, collaboration between regulators, fintechs, and crypto firms may finally become less adversarial and more symbiotic.
Bottom line
The U.S. Federal Reserve’s exploration of “skinny” payment accounts signals a potentially historic change in financial access, especially for crypto and fintech innovators long excluded from the traditional banking system.
While it’s too early to declare victory, Governor Waller’s remarks suggest that the Fed is finally embracing a future where innovation, inclusion, and security can coexist within the nation’s payment architecture.
If implemented, this policy could close the chapter on crypto’s banking exclusion and open a new era where digital asset firms operate as legitimate participants in the U.S. financial system.