Fed Proposes ‘Payment Account’ for Eligible Crypto Firms

On May 20, 2026, the Federal Reserve released a proposal and opened a 60-day public comment period to create a new, limited ‘payment account’ that would let legally eligible nonbank financial firms clear and settle payments directly at Reserve Banks.

The payment account would be a narrower product than a full master account. Holders would not receive intraday credit, access to the discount window, or interest on balances held at Reserve Banks. Automated controls would block transactions likely to create an overdraft, and account holders would be required to maintain anti-money-laundering and counter‑terrorist financing controls.

The proposal does not expand who is legally eligible for a Fed account. It defines a new product available only to institutions that already meet existing statutory criteria. Applicants could hold either a payment account or a master account, but not both.

Compared with a December 2025 prototype, the Board revised closing balance limits to be more flexible: caps would be tied to an institution’s expected payment activity, and the maximum allowed closing balance was increased.

The proposal followed an executive order signed on May 19 directing federal regulators to review rules that may prevent fintech and digital asset firms from accessing federal payment services and to act within six months. The order also asked the Fed to publish transparent application procedures and to decide on completed applications within 90 days. The payment account proposal is the Board’s first formal policy response after that directive.

The Board asked Reserve Banks to temporarily pause decisions on Tier 3 access requests under its Account Access Guidelines. Tier 3 covers institutions with novel charters and limited federal supervision, the category where most crypto-focused entrants apply. The length of the pause could affect how quickly current applicants receive final decisions.

A small number of digital-asset firms are pursuing direct Fed access. Kraken Financial received a Federal Reserve master account in March after obtaining a Wyoming special purpose depository institution charter. Ripple, Anchorage Digital and money-transfer firm Wise have filed for Fed accounts. For firms without a full master account, the payment account would provide a quicker route to settle payments at the Fed, while offering fewer privileges than a master account. Custodia Bank, which exhausted legal challenges earlier this year when the Tenth Circuit declined to rehear its case against the Fed, could use the new account category as an alternative route.

Industry reactions are divided. The Independent Community Bankers of America warned that broader Fed access for digital asset firms could increase financial risk. Crypto industry advocates argued the proposal responds to past concerns about restricted access to payment rails.

The 60-day comment period will inform how flexible the final framework is for nonbank applicants. Regulators and market participants will watch whether the pause on Tier 3 decisions is lifted before a final rule is adopted, which would affect the timing of decisions for applicants such as Ripple.