Fed Proposes ‘Skinny’ Accounts, Calls for Tier 3 Pause

The US Federal Reserve proposed creating limited payment accounts that could give legally eligible fintech and crypto-linked banks narrower access to its payment rails without the backstops available to traditional banks.

The proposal was released on Wednesday through a Federal Reserve Board request for comment and notice of proposed rulemaking, referring to “skinny master accounts” for nonbank financial institutions.

The Fed also encouraged regional Reserve Banks to pause decisions on Tier 3 account-access requests while it finishes the rulemaking, a step staff said is expected to end by Dec. 31, 2026.

Source: Eleanor Terrett

“The temporary pause will allow the Federal Reserve to solicit and consider public input on payment accounts and to promote consistent implementation,” the announcement said.

The move highlights ongoing regulatory tension over crypto access to US payment systems following President Donald Trump’s executive order calling for broader fintech and digital asset integration, while the Fed maintains a more cautious approach.

Tier 3 pause expected to end by Dec. 31

The Fed expects its temporary pause on Tier 3 master account applications to end on or before Dec. 31, according to a Board memo.

The memo also provided a list of “pending account requests” from Tier 3 institutions as of Feb. 28, 2026. The list included companies such as Kraken Financial, the banking arm of cryptocurrency exchange Kraken.

Kraken was later granted a limited-purpose master account by the US Federal Reserve Bank of Kansas City in early March 2026. The bank approved the access specifically under a Tier 3 classification.

Trump order and limits on direct Fed access by crypto

The crypto industry has long pursued access to Fed master accounts as a way to connect more directly to the US payment system.

The latest proposal does not give crypto exchanges direct access, even though there is broader political support for expanding fintech and digital asset access to the financial system.

Related: About 10% of Americans used crypto in 2025, highest level since 2022: Fed

Even as Trump’s executive order signaled support for wider fintech and digital asset integration, direct access to master accounts would still be unavailable to crypto exchanges. Instead, firms would need to operate through an affiliate that qualifies as an eligible depository institution under the Federal Reserve Act, according to Eleanor Terrett.

Source: Eleanor Terrett

The concept of “skinny” payment accounts was first introduced in October by Federal Reserve Governor Christopher Waller and was further developed through policy discussions in early 2026.

Unlike master accounts, the proposed payment accounts would be limited to clearing and settlement only. They would not earn interest or provide access to central banking tools such as the discount window or intraday credit.

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