Fed’s limited master accounts pit crypto against traditional banks

A growing dispute over the Federal Reserve’s proposal for limited master accounts, dubbed “skinny master accounts,” is sparking tension between the crypto industry and traditional banking groups as regulators push toward clearer digital‑asset policy this year.

At the centre of the debate is a Federal Reserve initiative to offer a new class of accounts that would grant qualified fintech firms and crypto‑focused entities access to the central bank’s payment system, but with restrictions on interest earnings, liquidity services, and other privileges associated with full master accounts.

Federal Reserve Governor Christopher Waller confirmed the central bank’s upcoming introduction of its “skinny master account” plan before year-end. Waller issued this statement at a time when there is a stall in broader cryptocurrency market structure legislation and when markets are struggling.

Even with these challenges, the Fed Governor remained optimistic that this simplified version of a Fed master account would be implemented before the start of next year. 

Waller urges individuals to prepare for the implementation of skinny master accounts

A standard master account is a primary, central account used to manage, group, and track financial transactions or data for multiple sub-accounts or branches, acting as a parent account in a hierarchical structure. It grants institutions the opportunity to access the Fed’s payment systems directly, providing them with seamless access to the US money supply.

However, reports highlighted that the suggested “skinny” account consists of several restrictions. For instance, the accounts would bear no interest and would not permit discount window borrowing.

On the other hand, crypto industry players and community banks submitted their views on whether regulators should offer non-bank financial institutions direct access to specific components of the US payment infrastructure. Their responses illustrate disagreements between the two parties. Responding to this dispute, Waller acknowledged that, “We’ll have to work through those issues, but if we manage it well, I’d like to complete this by the year’s end if possible.” 

While the Fed Governor anticipates reaching a mutually beneficial solution, sources noted that the central bank is advancing its initiatives on digital asset frameworks, while lawmakers in Washington, D.C., are confronting numerous obstacles to enacting a comprehensive regulatory framework for the industry.

At this moment, Waller stated that the crypto industry welcomed US President Donald Trump with widespread enthusiasm and hope for change upon taking office, given his pro-crypto stance. However, he claimed that this enthusiasm is waning as the prices of leading cryptocurrencies, such as Bitcoin, sink to their lowest levels in months.

“You get involved, you can earn some money, but you might also lose some,” Waller explained. “That’s just how things work in many of these cases. Some of the excitement that came with the current administration’s approach to crypto is starting to fade.” 

Crypto industry remains optimistic on market structure bill

Regarding Waller’s remarks, analysts acknowledged heightened tension among investors in the crypto market amid significant price declines. For example, Bitcoin hit an all-time high of over $126,000 last year; nonetheless, data from CoinMarketCap show that this price has dropped sharply, with the cryptocurrency currently trading at $70,066.89, reflecting a 0.86% decrease in the past 24 hours.

In the meantime, reports mentioned that lawmakers on Capitol Hill are attempting to pass a more comprehensive crypto market structure bill, widely known as “Clarity.” This name was derived from the House version that passed last summer. Still, Senate proceedings are facing serious hurdles, fueling concerns that clarity may be further delayed.

Notably, upon enactment of this bill, the crypto industry would be subjected to comprehensive oversight as it would set standards for crypto exchanges and DeFi operators. Moreover, it would outline the role of the Commodity Futures Trading Commission and the Securities and Exchange Commission, the key agencies in the crypto industry.

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