Trump Signs Executive Order, Kraken, Coinbase and Others May Gain Access to Fed Payment Channels
President Trump has signed an executive order, "Incorporating Financial Technology Innovation into the Regulatory Framework," pressuring the Federal Reserve to reassess its rules on granting non-bank financial companies—including crypto and fintech firms—access to its payment systems, specifically master accounts that connect to the Fedwire settlement system.
Currently, such accounts are primarily reserved for depository institutions. The order mandates a review to determine if broader access is permissible and to establish an application process. This move, supported by figures like Senator Cynthia Lummis, aims to reduce barriers to innovation and lower public payment costs by fostering fairer competition. It does not grant immediate access but could pave the way for companies like Kraken, Coinbase, Ripple, and Circle to reduce reliance on intermediary banks, lowering costs and speeding up settlements.
A key precedent is the Kansas City Fed granting Kraken's parent company a restricted master account in March, offering limited payment services without interest or credit privileges. This model is seen as a potential template for allowing controlled access while mitigating systemic risk. Other firms like Anchorage, Paxos, and BitGo, which hold specialized banking charters, are also well-positioned to apply.
The banking industry, represented by the American Bankers Association, opposes easing access, arguing any institution handling bank-like payments must meet the same stringent regulatory, consumer protection, and risk-management standards as traditional banks. Their core concerns include potential systemic risks, compliance gaps in areas like anti-money laundering, and the diversion of liquidity from the traditional banking system.
The outcome of the Fed's review will be crucial in determining whether and how crypto and fintech firms can integrate more directly into the core U.S. financial infrastructure, balancing innovation with financial stability.
marsbit05/21 05:57
