The US banking sector has intensified its opposition to granting direct access to the Federal Reserve’s payment systems to cryptocurrency and fintech firms. The Bank Policy Institute, Clearing House Association, and Financial Services Forum have submitted a joint comment letter to the Fed, arguing that these firms should be required to wait for 12 months before being eligible to apply for payment accounts. The banking groups are concerned that allowing direct access would pose significant risks to the financial system, as the Fed has limited experience with many of these applicants and lacks oversight authority over them.<\/p>\n
The debate centers around the “skinny account” proposal, which would allow stablecoin issuers like Circle Internet Financial and payment firms like Stripe to bypass traditional banks and access the Fed’s payment systems directly. However, the banking groups argue that this would require a 12-month waiting period to ensure that these firms can operate safely and soundly. They also warn that the proposed accounts do not provide adequate protections against potential runs on the newly-licensed companies.<\/p>\n
The Financial Technology Association and other fintech and crypto firms have pushed back against these concerns, arguing that the proposed accounts are too restrictive and inflexible. They point out that the current proposal does not allow account holders to access the Fed’s Automated Clearing House (FedACH) system, which processes trillions of dollars in transactions annually. They also argue that the overnight balance cap of $500 million or 10% of total assets is too restrictive for scaled payment firms that handle billions of dollars in daily volume.<\/p>\n
The issue has sparked a heated debate, with financial stability advocates and banks warning that the proposed accounts pose significant risks to the financial system. The Better Markets watchdog group has warned that the momentum is likely against the banks, and that the provision of payment accounts by the Fed is likely to be implemented despite their concerns. The debate is unfolding in parallel with another contentious issue: whether crypto exchanges like Coinbase should be able to offer rewards tied to their customers’ stablecoin balances. The White House has stepped in to broker negotiations, aiming to resolve the issue by the end of the month.<\/p>\n","protected":false},"excerpt":{"rendered":"
The US banking sector has intensified its opposition to granting direct access to the Federal Reserve’s payment systems to cryptocurrency and fintech firms. The Bank Policy Institute, Clearing House Association, and Financial Services Forum have submitted a joint comment letter to the Fed, arguing that these firms should be required to wait for 12 months […]<\/p>\n","protected":false},"author":1,"featured_media":217954,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[40],"tags":[],"class_list":["post-222678","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/smallnews.in\/banking\/wp-content\/uploads\/sites\/4\/2024\/12\/Banking-India.png?fit=287%2C43&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p9pSib-VVA","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":222505,"url":"https:\/\/smallnews.in\/banking\/banking\/the-federal-reserve-has-permanently-reversed-its-2023-restrictions-on-banks-engaging-in-cryptocurrency-activities\/","url_meta":{"origin":222678,"position":0},"title":"The Federal Reserve has permanently reversed its 2023 restrictions on banks engaging in cryptocurrency activities.","author":"Team Small News","date":"December 18, 2025","format":false,"excerpt":"The Federal Reserve has introduced a new policy that replaces its 2023 rule, allowing state member banks to utilize innovative tools without being limited by the previous regulations. 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