Summary
The Fed proposed "skinny" payment accounts for nonbanks — limited access to Fedwire, FedNow, and National Settlement Service (but not ACH) with a $1B balance cap. The proposal was approved 6-1 (Barr dissenting). Regional Reserve Banks were directed to pause Tier 3 decisions until rulemaking completes by December 31, 2026.
Key Points
- Proposal: limited payment accounts for nonbank financial institutions
- Fed vote: 6-1 (Governor Michael Barr dissented over AML safeguards)
- Services included: Fedwire Funds, National Settlement Service, FedNow, Fedwire Securities
- Services excluded: ACH (payroll, bill payments, direct deposits, check conversions)
- Balance cap: $1 billion flat (up from earlier $500M or 10% of assets proposal)
- Tier 3 pause: regional Reserve Banks to pause decisions until rulemaking complete
- Timeline: rulemaking expected by December 31, 2026
- Comment period: 60 days from publication
- Kraken precedent: Kansas City Fed granted limited-purpose master account in March 2026
- Waller's role: Fed Governor Christopher Waller chairs payments committee; first proposed concept October 2025
- Trump EO 14405: called for broader fintech integration; Fed responded 2 days later
- Key limitation: firms still need banks for ACH-dependent services
- Barr's concern: "does not provide sufficiently specific and robust safeguards" against money laundering
- Industry reaction: fintechs welcome progress but criticize ACH exclusion
- What to watch: whether ACH access is added in final rule; comment period outcome