U.S. Fed considers introducing 'skinny master account'…seeking public comment

The U.S. central bank, the Federal Reserve (Fed), is reviewing the introduction of a new payment account system that could allow fintech and cryptoasset firms to access the central bank and has launched a public consultation. The so-called 'skinny master account (skinny master account)' envisages a limited payment account in a form different from existing banks.

On the 22nd (local time), Cointelegraph reported that the Fed recently requested views from the general public and industry on the introduction of the 'skinny master account'. Fed Governor Christopher Waller said, "The new payment account can support innovation while maintaining the safety of the payment system," adding, "It is necessary to reflect the rapid changes in the payments industry and new financial business models."

Waller suggested in October that the Fed should consider introducing dedicated accounts for certain eligible financial institutions that perform only transaction settlement and payment functions. He added that because the payment account's functions are more limited than existing master accounts, it could reduce overall risks to the payment system and simplify the screening process.

However, there are also concerns within the Fed. Fed Governor Michael Barr pointed out, "If clear safeguards for anti-money laundering (AML) and countering the financing of terrorism (CFT) are not in place, allowing account access to institutions not directly supervised by the Fed could be risky."

Market observers say payment-focused cryptoasset firms could be primary candidates for the accounts. U.S.-based crypto payment firms such as Circle, Coinbase, Kraken, and Block could strengthen the link between traditional finance and cryptoassets if directly connected to the Fed's payment network.