Why are banks opposing crypto firms' access to the Federal Reserve's payment systems?

Banks are demanding a 12-month waiting period before crypto and fintech firms can apply for payment accounts, arguing that stablecoin issuers must first prove their operational safety.

What is the significance of direct access to the Federal Reserve's payment systems?

Direct access to the Fed's payment systems allows crypto and fintech firms to bypass traditional intermediary banks for essential services and compliance infrastructure.

What specific concerns do banks have regarding the proposed 'skinny accounts' for crypto firms?

Banks are concerned about the proposed accounts lacking overdraft privileges, limiting access to FedACH, and imposing restrictive overnight balance caps, which could hinder operations.

Home / Business and Economy / Banks Block Crypto Firms From Fed's Payment System

Banks Block Crypto Firms From Fed's Payment System

10 Feb

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Summary

Banks want a 12-month wait before crypto firms get Fed access.
Lobbyists argue stablecoin issuers must prove safe operations first.
Direct Fed access allows firms to bypass partner banks.

Banks Block Crypto Firms From Fed's Payment System

Banks have intensified their opposition to granting crypto and fintech companies direct access to the Federal Reserve's payment systems. Key banking industry groups are advocating for a mandatory 12-month waiting period before any new applicants can be considered for payment accounts. They argue that companies issuing stablecoins must demonstrate a history of safe and sound operations before being granted such access.

This dispute centers on the control of essential US payment infrastructure, which has historically been exclusive to banks. Currently, crypto and fintech firms depend on partner banks for critical services like anti-money laundering monitoring and compliance. The proposed direct access would eliminate this reliance, allowing firms to operate more autonomously.

Industry observers suggest that the Fed is likely to proceed with its plan despite these objections. In anticipation of potential new regulations, many fintech and crypto firms have already applied for national trust bank charters, with the explicit goal of securing master account access. However, traditional banks are pushing for stricter eligibility requirements, including limiting access to federally supervised institutions with insured deposits.