Editor's Note: The access rules of the U.S. payment system are at a critical juncture. The banking industry hopes to continue guarding the gateway to the Federal Reserve to prevent bank runs and regulatory disorder; while crypto and fintech companies seek to bypass banking intermediaries and gain direct access to the core clearing system. Disagreements over stablecoin yields, account permissions, and regulatory responsibilities are intertwined, escalating this institutional debate. The focus of the controversy is no longer a specific account design, but rather who has the right to directly enter the core of the U.S. payment infrastructure.
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The banking industry has officially stated its opposition to directly opening the Federal Reserve's payment system to crypto companies and fintech companies, further escalating the controversy surrounding "who has the right to control the core gateway to the U.S. payment infrastructure."
The Bank Policy Institute (BPI), the Clearing House Association, and the Financial Services Forum laid out detailed arguments in a joint comment letter, calling for a mandatory 12-month waiting period before companies become eligible to apply for payment accounts. Specifically, these lobbying groups argued that the Fed should not grant system access to newly licensed stablecoin issuers until they can demonstrate safe and sound operation. If the dispute moves to judicial proceedings, these arguments could form the basis for further escalating the conflict.
The core of the controversy is whether to allow direct access to the Fed's payment "pipeline," a privilege long monopolized by the banking system. Currently, crypto companies and fintech companies still rely on partner banks to gain access to payment systems and compliance infrastructure support, such as anti-money laundering monitoring. The proposed "skinny account" could potentially allow stablecoin issuers and payment companies to bypass banking intermediaries and connect directly to the Fed system.
Banking groups argue that a prerequisite for such accounts should be that applicants have at least 12 months of "successful and safe and sound operational history." They point out that the Fed lacks sufficient experience with many potential applicant institutions and also lacks direct regulatory authority over most of them. Furthermore, although the Genius Act was signed into law by the President this past July, a specific regulatory framework for stablecoin operators has not yet been fully implemented.
In a joint comment letter submitted on February 6th, the Bank Policy Institute (BPI), the Clearing House Association, and the Financial Services Forum stated that while the proposal sets up some important safeguards for the financial system, it does not necessarily prevent the risk of runs that newly chartered institutions might face.
The financial regulatory oversight group Better Markets warned that the overall momentum might not be on the banks' side. Better Markets CEO Dennis Kelleher wrote in a comment: "The arrangement for the Fed to provide payment accounts is highly likely to move forward, regardless of opposition." The public comment period ended last Friday.
To preempt these concerns and proactively comply with the upcoming rules of the Genius Act, a large number of fintech and crypto companies have begun applying for national trust bank charters, with some explicitly stating that their ultimate goal is to apply for access to a Fed master account.
Back in 2022, the Fed introduced a tiered review system to evaluate master account applications. Anchorage Digital Bank, which holds a national trust bank charter, recently applied as a "Tier 3" entity, a category that typically implies the strictest scrutiny. The American Bankers Association (ABA) argues that master account access should be limited to institutions classified as "Tier 1," which are directly supervised by federal banking regulators and hold federal deposit insurance.
The banking organization also stated that the new payment accounts should not be used as a "stepping stone" to a master account, which should always be obtained through a separate application process.
Circle and Anchorage, however, believe that the proposed "skinny accounts" are too rigid and restrictive in design. For example, the current proposal does not allow account holders access to FedACH, a payment system that processes trillions of dollars in transactions annually. When initially proposing the account concept last year, Fed Governor Christopher Waller stated that skinny accounts would not provide overdraft facilities nor access to discount window funding. Circle noted in its comment letter that whether to open FedACH to payment accounts depends on the ability to establish corresponding control mechanisms to prevent overdrafts.
The Financial Technology Association also criticized the overnight balance cap. Set at $500 million or 10% of total assets (whichever is lower), the association believes this limit is too harsh for established payment companies, as such institutions often process tens of billions of dollars in transactions daily.
Anchorage pointed out that if this cap remains, account holders would be forced to sweep funds exceeding the limit into partner bank accounts overnight at the end of each business day. Additionally, Anchorage added that payment account holders should also be able to earn interest on their balances in Fed reserve accounts.
This debate unfolds alongside another highly sensitive issue: whether crypto trading platforms like Coinbase Global Inc. should be allowed to offer users yield incentives linked to their stablecoin balances. Currently, Coinbase Global Inc. offers a 3.5% yield return to its USDC balance users. The banking industry believes this practice could "siphon" deposits away from the traditional financial system, posing a threat to the banking deposit base. It is this disagreement that has slowed the progress of related legislation.
It is reported that the White House has介入 (intervened/jumped in) to coordinate negotiations and hopes to push for a resolution on this issue by the end of this month.
However, these concerns did not become the core focus of discussion in the comment letters regarding "skinny accounts."
Financial stability advocates and banking groups also warned that the proposed accounts exceed the Fed's statutory authority and could pose significant systemic risks.
The financial regulatory group Better Markets stated bluntly in its comment letter: "The proposal itself clearly indicates that the Fed is aware that the institutions that are, and will be, applying for access to payment accounts pose enormous risks to the Federal Reserve System and the entire financial system. This is precisely why almost the entire proposal revolves around risk mitigation."
