A growing coalition of fintech trade groups is urging the Federal Reserve to move faster on its long-discussed Payment Account proposal, a plan that could reshape access to the U.S. payments system and potentially reduce the ongoing problem of crypto debanking.
Led by the American Fintech Council, the coalition has submitted a formal comment letter asking the central bank to advance a prototype that would allow eligible non-bank financial firms to directly access core payment infrastructure without becoming full-service banks.
Supporters say the move would modernize the payments landscape by lowering costs, cutting out unnecessary intermediaries, and reducing reliance on sponsor banks. Critics, however, warn it could open the door to new financial stability risks, especially for stablecoin issuers and crypto-adjacent businesses operating outside traditional banking oversight.
A “Skinny” Path to Payments Access
Payment Accounts are designed as a limited alternative to full Federal Reserve master accounts. Rather than granting full banking privileges, these accounts would allow firms to settle payments directly while imposing strict safeguards such as balance caps, no interest on reserves, and limited access to final-settlement systems like Fedwire.
“A well-designed Payment Account can expand competition and responsible innovation in payments without introducing new risk,” said Phil Goldfeder, CEO of the American Fintech Council, emphasizing that the proposal would preserve the Fed’s long-standing prudential standards.
The idea gained momentum last year when Christopher Waller floated the concept of so-called “skinny” master accounts. These accounts would deliberately avoid features such as interest payments or access to the Fed’s discount window, addressing concerns that non-banks could otherwise gain bank-like advantages without equivalent supervision.
Why Fintechs Want In
Today, most fintechs must rely on sponsor banks to connect to core payment rails. That arrangement, according to the coalition, adds friction, raises operating costs, introduces counterparty risk, and ultimately limits competition.
Direct access through Payment Accounts, fintechs argue, would streamline operations while keeping systemic risk in check. Although the Fed’s proposal does not explicitly reference crypto firms, many in the banking industry believe stablecoin issuers and crypto payment platforms would be among the biggest beneficiaries.
Banks Push Back on Stability Concerns
Traditional banking groups remain skeptical. They argue that allowing non-banks to settle payments directly could encourage deposit-like activity without deposit insurance, resolution frameworks, or consolidated federal oversight. Stablecoins, in particular, are viewed as a flashpoint, given their ability to mimic bank deposits without falling squarely under banking regulation.
These concerns are closely tied to the Fed’s broader discretion over access to its infrastructure, a power that has been repeatedly upheld by the courts.
Legal Context and What Comes Next
The debate over Payment Accounts is unfolding alongside the high-profile legal fight involving Custodia Bank, which has challenged the Fed’s denial of its master account application. Courts have consistently sided with the central bank, reinforcing its authority to deny access based on systemic risk considerations.
Speaking at a conference on Monday, Waller said the Fed is targeting a rollout of skinny master accounts by the end of the year. If implemented, the framework could mark a significant shift in how fintechs and crypto-adjacent firms interact with the U.S. payments system.
Elsewhere in the regulatory landscape, crypto-linked legal challenges continue to mount, including a recent lawsuit filed by Polymarket against Massachusetts regulators over prediction market rules.
