Federal Reserve Proposes 'Skinny' Master Account for Non-Traditional Firms

The Federal Reserve has proposed creating a limited payment account for non-traditional firms, such as fintech and crypto companies. This 'skinny' master account would allow holders to directly access the Fed-run payment system but with fewer features than traditional accounts.

The proposal aims to speed up the approval process for these firms, which have often faced long waits or rejection when applying for master accounts. The proposed rule would not modify eligibility requirements and would limit the balance of the account and exclude access to certain services such as the Fed's discount window.

Fed Governor Christopher Waller has referred to this proposal as a 'skinny' master account, which would grant holders direct access to payment systems but with fewer features. The proposal has been met with both support and criticism from various stakeholders, including the Bank Policy Institute, which argued that the pilot program for Kraken, a Wyoming Special Purpose Depository Institution (SPDI), front-runs the public comment process.