Federal Reserve Governor Christopher Waller proposed a brand new cost account on Oct. 21 that will grant stablecoin issuers and crypto companies direct entry to Fed cost rails with out full grasp account privileges.
The announcement on the Fed’s inaugural Funds Innovation Convention marked a reversal from the central financial institution’s guarded stance towards digital asset companies.
Waller described the idea as a “skinny” grasp account offering primary Fedwire and ACH connectivity whereas stripping out curiosity funds, overdraft amenities, and emergency lending. The brand new account creates a payments-only door that would reshape how stablecoin issuers settle greenback flows.
The account would carry stability caps, pay no curiosity, supply no daylight overdrafts, and exclude low cost window borrowing.
Companies pursuing full grasp accounts, corresponding to Custodia Financial institution, Kraken, Ripple, and Anchorage Digital, may benefit from quicker approval timelines.
The convention assembled roughly 100 personal sector innovators in what Waller framed as a brand new period by which “the DeFi trade just isn’t seen with suspicion or scorn” however is “to the dialog on the way forward for funds.”
Slender banking and stablecoin construction
The cost account revives slim banking, separating funds from credit score creation.
Stablecoin issuers already function as de facto slim banks, holding backed reserves and transferring cash with out lending, however lack direct Fed entry and should associate with industrial banks to redeem tokens.
Waller’s proposal would let qualifying companies maintain reserves instantly with the Fed, again tokens with central financial institution cash, and eradicate friction between banks and companions that creates bottlenecks throughout stress.
Direct Fed entry would place compliant US stablecoins nearer to slim cash, lowering bank-run danger.
If reserves sit on the Fed slightly than industrial financial institution deposits, tokens turn into claims on central financial institution liabilities, eliminating credit score danger.
Caitlin Lengthy, CEO of Custodia Financial institution, framed the shift as correcting “the horrible mistake the Fed made in blocking payments-only banks from Fed grasp accounts.”
Operational enhancements and trade-offs
Redemption flows can be extra environment friendly if issuers posted and acquired funds instantly slightly than routing them by way of associate banks.
The development is mechanical, with fewer steps, decrease latency, diminished dependency on financial institution hours, however materials throughout heavy flows when redemption queues lengthen.
Issuers redeeming into associate accounts and initiating wires might full each legs with Fed rails, compressing settlement from hours to close real-time and eradicating the danger {that a} associate financial institution freezes transfers.
Steadiness caps will decide utility for giant issuers. Tether holds reserves within the tens of billions. Strict caps would possibly accommodate operational liquidity however not the entire base, forcing a cut up of reserves.
The Fed’s objectives, that are controlling stability sheet influence and limiting credit score publicity, will form caps, and issuers will weigh direct Fed entry for a slice of reserves versus holding all the pieces with industrial banks.
Ripple CEO Brad Garlinghouse argued practically one week earlier than Waller’s speech that crypto companies that meet banking-grade AML and KYC requirements ought to obtain banking-grade entry to infrastructure, as CoinDesk reported.
Ripple filed a grasp account utility in 2025. Direct Fed entry would permit Ripple to settle greenback legs of cross-border transactions with out utilizing correspondent banks.
The logic applies to exchanges and custodians that depend on financial institution companions for fiat rails, direct Fed connectivity removes a dependency and a choke level.
Arthur Hayes, co-founder of BitMEX, supplied a skeptical take:
“Think about if Tether didn’t have to depend on a TradFi financial institution for its existence. The Fed is transferring to destroy industrial banking within the US.”
The priority is disintermediation. If giant issuers and cost processors entry Fed rails instantly, they now not want industrial banks for primary companies, eroding deposit bases whereas concentrating liquidity on the Fed.
The restrictions Waller outlined, corresponding to no curiosity, stability caps, and no overdrafts, goal to string the needle to help funds innovation with out making the Fed the first deposit taker or assuming credit score danger on nonbanks.
Right here’s what modifications
Waller directed Fed workers to assemble stakeholder suggestions, however didn’t specify a timeline.
The GENIUS Act, signed into regulation in July 2025, established federal stablecoin necessities however didn’t grant direct Fed entry.
Waller’s proposal fills that hole. Companies with pending purposes might see quicker selections. Banks with cost subsidiaries might apply first, whereas crypto-native fintechs comply with as soon as the framework solidifies.
The cost account formalizes crypto’s entry into Fed-supervised infrastructure. If main issuers acquire Fed accounts, the influence on liquidity and settlement high quality turns into systemic.
Fed-backed reserves can’t be frozen by a industrial financial institution or topic to intermediate establishment credit score danger, compressing settlement danger throughout stress.
Regulatory arbitrage narrows as offshore issuers or these unwilling to satisfy GENIUS Act requirements lose floor to US-regulated issuers providing Fed-backed tokens with structural security benefits, consolidating market share amongst compliant companies.
Waller’s proposal opens a payment-only door into the Fed underneath stability caps and tight restrictions, revives slim banking, positions compliant stablecoins as central bank-backed devices, and creates a degree enjoying subject whereas disintermediating some industrial financial institution companies.
The coverage shift integrates crypto into the funds system underneath supervision, with direct settlement lowering fragility and recognizing that digital asset infrastructure has moved from the fringes to the core of how {dollars} transfer.