Fed seeks public input on 'skinny master account' for limited access to the central bank

The U.S. Federal Reserve is seeking public feedback on a proposed "payment account" — informally dubbed a "skinny master account" — that would give certain eligible institutions, potentially some crypto-related firms, limited access to the central bank’s payment services.

In a request for information posted on Friday, the Federal Reserve asked for comments on the "payment account" for institutions to clear and settle payments without granting the full privileges of a traditional master account.

"These new payment accounts would support innovation while keeping the payments system safe," said Fed Governor Christopher J. Waller, in a statement. "This request for information is a key first step to ensuring that the Fed is responsive to evolutions in how payments are made."

Waller earlier floated the idea in October, nicknaming it the "skinny master account," and said it would have some limitations around interest and overdraft privileges. A master account allows institutions direct access to the Fed's payment systems and provides the most direct access to the U.S. money supply available to financial institutions. Those without master accounts are often forced to rely on partner banks with master accounts to provide services.

In a memo, the Fed stated that the payment account would have certain limitations, including not earning interest on balances held at the reserve banks, and noted that it is exploring additional risk controls, such as specific reporting requirements.

Crypto-friendly Sen. Cynthia Lummis, R-Wyo., called the Fed's request for information a "big step towards making things right," in a post on X.

"Skinny master accounts will enable responsible innovation, and make payments faster, cheaper, and safer," Lummis said.

Rachel Anderika, chief operating officer at Anchorage Digital Bank, said a skinny master account from the central bank is good for innovation. 

“Access to Fed rails would unlock the efficiency and regulatory certainty that crypto firms need to scale and keep the U.S. at the forefront of payments innovation,” Anderika said in a statement.

Fed Governor Michael Barr pushed back against the concept.

"While I support the concept of the Federal Reserve developing a payment account prototype that it might provide to legally eligible institutions, I cannot support this request for information (RFI) because it is not sufficiently specific about safeguards to protect against the accounts being used for money laundering and terrorist financing by institutions we do not supervise," Barr said in a statement on Friday.

Comments are due in 45 days.

Updated to include comments from Anchorage Digital Bank

Corrected to remove political parties from Fed governors' titles