Federal Reserve's Waller proposes a streamlined master account to include payment and encryption operators.

Christopher Waller, a member of the Federal Reserve Board of Governors, delivered the opening speech at the first “Payment Innovation Conference,” clearly stating that the Federal Reserve should “embrace disruption” and proposed exploring a new type of “payment account,” referred to as a “skinny master account.” This is a limited version of the master account designed for payment innovators such as fintechs, stablecoin issuers, and cryptocurrency companies, aimed at providing direct access to the Federal Reserve's payment system without relying on third-party banks.

Payment and encryption operators may have streamlined master accounts.

The Federal Reserve Board of Governors member Christopher Waller stated at the Federal Reserve's Payment Innovation Conference in Washington that the Federal Reserve will more actively explore how to adopt innovations in the payment space, including studying the provision of “streamlined master accounts” for certain institutions. The Federal Reserve's stance is to support innovation while emphasizing that services must be tailored to the needs and risks of institutions.

He mentioned that many legitimate qualified institutions (, such as payment companies and crypto-native fintech companies ), engage in a large volume of payment activities but do not require all the functionalities of a complete master account. The new type of account can provide these institutions with basic payment services, allowing them to break free from reliance on third-party banks and facilitate the transformation of the payment system.

The “simplified master account” may exist in the following forms:

No interest on remaining balance

There may be a balance limit.

No support is provided for intraday overdrafts or emergency loans.

A New Era in the Payment Sector of The Federal Reserve

Waller emphasized that this marks a new era in the Federal Reserve's payment landscape, where encryption and decentralized finance (DeFi) are no longer fringe. The Federal Reserve should “embrace disruption rather than avoid it,” and actively learn these technologies to upgrade its own infrastructure. Waller has instructed Federal Reserve staff to explore feasibility, which may include streamlining approval processes. The Federal Reserve will follow the “Account and Service Request Assessment Guidelines” to provide master accounts and financial services to legally qualified entities. The payment accounts will be open to all legally qualified institutions and will benefit those primarily focused on payment innovation.

The traditional master account is key for banks to directly connect to the Federal Reserve payment network. Custodia Bank and PayServices Bank have long fought for this privilege, but have repeatedly been denied due to regulatory concerns, ultimately resorting to the courts. However, in both cases, federal agencies won.

Custodia Bank founder and CEO Caitlin Long stated:

“Custodia welcomes the Federal Reserve's acknowledgment of the importance of pure payment banks. We have always known that there is a large but understated force within the Federal Reserve supporting us, and we are pleased to see Governor Waller publicly recognize this.”

However, if the simplified version of the master account does not pay interest, it will shatter the dreams of payment providers, as the current interest rate for the master account is still as high as 4.15%.

This article about the Federal Reserve's Waller proposing a streamlined master account, incorporating payments and crypto businesses, first appeared in ChainNews ABMedia.