Federal Reserve Governor Christopher Waller on October 21 proposed a new checking account that would give stablecoin issuers and crypto companies direct access to the Fed payment rails without full master account privileges.
The announcement at the Fed’s first Payments Innovation Conference marked a reversal from the central bank’s cautious stance toward digital asset companies.
Waller described the concept as a “skinny” main account that offers basic Fedwire and ACH connectivity while excluding interest payments, overdrafts and emergency loans. The new account creates a payments-only door that could reshape how stablecoin issuers settle dollar flows.
The bill would have a balance cap, pay no interest, offer no daylight overdrafts and exclude loans with discount terms.
Companies pursuing full master accounts, such as Custodia Bank, Kraken, Ripple and Anchorage Digital, could benefit from faster approval timelines.
The conference brought together about 100 private sector innovators in what Waller described as a new era in which “the DeFi industry is not viewed with suspicion or disdain” but “joins the conversation about the future of payments.”
Narrow banking and stablecoin structure
The current account breathes new life into narrow banking, separating payments from the creation of credit.
Stablecoin issuers already operate as de facto narrow banks, holding secured reserves and moving money without making loans, but lack direct access from the Fed and must partner with commercial banks to redeem tokens.
Waller’s proposal would allow eligible companies to hold reserves directly with the Fed, backfill tokens with central bank money, and eliminate the friction between banks and partners that causes bottlenecks during stress.
Direct Fed access would bring compliant US stablecoins closer to the narrow currency, reducing the risk of bank runs.
If reserves are held by the Fed instead of commercial banks, tokens become claims on central bank liabilities, eliminating credit risk.
Caitlin Long, CEO of Custodia Bank, framed the shift as a correction to “the terrible mistake the Fed has made by banks only blocking payments from Fed main accounts.”
Operational improvements and tradeoffs
Redemption flows would be more efficient if issuers posted and received payments directly rather than routing them through partner banks.
The improvement is mechanical, with fewer steps, lower latency, and reduced reliance on banking hours, but essential during high flows when redemption queues lengthen.
Issuers redeeming and initiating transfers on partner accounts could complete both paths with Fed rails, compressing settlement from hours to near real-time and removing the risk of a partner bank freezing transfers.
Balance limits will determine utility for large issuers. Tether has reserves in the tens of billions. Stricter caps could accommodate operational liquidity, but not the entire base, necessitating a split of reserves.
The Fed’s goals of containing impact on the balance sheet and limiting credit exposure will determine the ceilings, and issuers will weigh the Fed’s direct access to some reserves against keeping everything in commercial banks.
Ripple CEO Brad Garlinghouse argued nearly a week before Waller’s speech that crypto companies that meet bank-grade AML and KYC standards should be given access to bank-level infrastructure, as CoinDesk reported.
Ripple submitted a master account application in 2025. Direct Fed access would allow Ripple to settle the dollar portions of cross-border transactions without using correspondent banks.
The logic applies to exchanges and custodians that rely on banking partners for fiat trails; direct Fed connectivity removes a dependency and a bottleneck.
Arthur Hayes, co-founder of BitMEX, offered a skeptical view:
“Imagine if Tether didn’t depend on a TradFi bank for its existence. The Fed plans to destroy commercial banking in the US.”
The concern is disintermediation. If large issuers and payment processors gain direct access to the Fed rails, they will no longer need commercial banks for basic services, eroding the deposit base while concentrating liquidity at the Fed.
The restrictions Waller outlined, such as no interest rates, balance sheet limits and no overdrafts, are intended to support payments innovation without the Fed becoming the primary deposit taker or taking on credit risk on non-banks.
This is what’s changing
Waller directed Fed officials to gather feedback from stakeholders, but did not provide a timeline.
The GENIUS Act, which was signed into law in July 2025, established federal stablecoin requirements but did not provide direct access for the Fed.
Waller’s proposal fills that gap. Companies with pending applications could make faster decisions. Banks with payment branches can apply first, while crypto-native fintechs will follow once the framework becomes more robust.
The checking account formalizes crypto’s access to the Fed’s controlled infrastructure. As large issuers acquire Fed accounts, the impact on liquidity and settlement quality becomes systemic.
Fed-backed reserves cannot be frozen by a commercial bank or subject to intermediary credit risk, compressing settlement risk during stress.
The regulatory arbitrage is shrinking as offshore issuers or those unwilling to comply with GENIUS Act standards lose ground to US-regulated issuers offering Fed-backed tokens with structural security benefits, consolidating the market share of compliant companies.
Waller’s proposal opens a payment-only door to the Fed under balance sheet limits and severe restrictions, revives narrow banking, positions compliant stablecoins as central bank-backed instruments, and creates a level playing field while deintermediating some commercial banking services.
The policy change integrates crypto into the supervised payment system, with direct settlement reducing vulnerability and recognizing that digital asset infrastructure has moved from the margins to the core of how dollars move.