The U.S. Federal Reserve has proposed a new category of restricted payment accounts that could give eligible fintech and crypto-linked banks access to parts of the central bank’s payment infrastructure without granting the full privileges available to traditional banks.
Summary
- The Federal Reserve has proposed restricted payment accounts that would give eligible fintech and crypto-linked banks access to clearing and settlement services.
- Regional Federal Reserve Banks have been asked to pause Tier 3 master account decisions until the rulemaking process is expected to end by Dec. 31, 2026.
- Kraken Financial previously received a limited-purpose master account from the Kansas City Fed, intensifying debate over crypto access to U.S. payment infrastructure.
According to a Federal Reserve Board notice released Wednesday, the proposal would create limited-purpose “payment accounts” for certain nonbank financial institutions, allowing access to clearing and settlement services while excluding tools such as interest on reserves, intraday credit, and the Fed’s discount window.
Through the same proposal, the Fed asked regional Reserve Banks to temporarily pause decisions on pending Tier 3 master account applications while the rulemaking process moves forward. Staff said the pause is expected to remain in place until Dec. 31, 2026.
Federal Reserve officials said the suspension would allow time to gather public feedback and apply the framework consistently across Reserve Banks. The proposal was published as both a request for comment and a notice of proposed rulemaking.
Coming just a day after U.S. President Donald Trump directed the Federal Reserve to review access policies for fintech and crypto firms, the latest proposal keeps direct Fed access out of reach for crypto exchanges themselves.
Under the framework described by journalist Eleanor Terrett, firms would still need to operate through an affiliate that qualifies as an eligible depository institution under the Federal Reserve Act.
Fed formalizes “skinny” account discussions
Inside a separate Board memo, the Federal Reserve said its temporary halt on Tier 3 account requests should end on or before Dec. 31. The document also listed pending applications as of Feb. 28, including a request tied to Kraken’s banking arm, Kraken Financial.
In March 2026, the Federal Reserve Bank of Kansas City approved a limited-purpose master account for Kraken Financial under the Tier 3 framework. The Wyoming-chartered institution became one of the first crypto-linked banking entities to receive direct connectivity to core U.S. payment rails used for settlement.
At the time, Kraken Co-CEO Arjun Sethi described the approval as the convergence of crypto infrastructure with sovereign financial rails. Even so, the account came with restrictions that prevented the firm from earning interest on reserves or borrowing from the Fed’s liquidity facilities.
Pressure around the issue intensified after the approval became public. The Independent Community Bankers of America said it had concerns about allowing a crypto-focused institution access to Federal Reserve infrastructure under a regulatory structure different from conventional banks. The Bank Policy Institute also argued that the Kansas City Fed moved ahead with what it described as a “skinny” master account before a formal systemwide policy had been finalized.
Banking organizations additionally questioned the treatment of Wyoming Special Purpose Depository Institutions, or SPDIs, because those entities do not carry federal deposit insurance. Industry groups argued that allowing uninsured institutions direct settlement access could introduce compliance and financial stability concerns.
Although the latest proposal narrows the scope of available services, it builds on policy discussions first introduced publicly by Federal Reserve Governor Christopher Waller in October. Waller had floated the concept of restricted payment accounts that separate settlement access from broader central banking privileges traditionally reserved for regulated commercial banks.
Elsewhere in Washington, lawmakers have also started pushing for legislative support around payment access. California Representatives Sam Liccardo and Young Kim recently introduced the Payments Access and Consumer Efficiency Act, known as the PACE Act, which would allow certain non-bank firms to access Federal Reserve payment services.
The proposal has emerged alongside a separate Federal Reserve effort to loosen parts of the post-2008 bank capital framework.
Back in March, Fed Vice Chair for Supervision Michelle Bowman introduced a package of Basel III, eSLR, and G-SIB reforms that banking groups said could reduce capital burdens for large and regional lenders. While those discussions focused on traditional banking regulation, both initiatives have added to the debate over how much access nontraditional financial firms should receive within the U.S. financial system.
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