Banking industry: ‘Stablecoin issuers should be vetted for at least a year before getting a Fed payments account’… Clash over ‘skinny accounts’

Major U.S. banking lobby groups are moving to strongly pump the brakes on the Federal Reserve’s proposed so-called “skinny master account (payment account).”

According to Bloomberg on the 9th (local time), the Bank Policy Institute (BPI), The Clearing House Association and the Financial Services Forum said in a recent joint comment letter submitted to the Fed that “newly chartered stablecoin issuers should be eligible to apply for a payments account only after demonstrating at least one year of safe and sound operating performance.” They warned that, with the regulatory framework for stablecoins still incomplete, the Fed granting payments access directly could increase risks to the financial system.

At issue is “direct access” to the Fed’s payments infrastructure. Currently, crypto and fintech firms use banks as intermediaries to access payment networks and anti-money laundering (AML) controls. But if skinny accounts are introduced, stablecoin issuers or payment firms would be able to gain limited access to the Fed system without going through those intermediaries.

Banks argue that the Fed lacks sufficient supervisory authority and operational experience overseeing these firms. In particular, they say stablecoin issuers, lacking deposit insurance or adequate liquidity backstops, would struggle to respond in the event of a run. Another concern cited is that the related legislation, the “GENIUS Act,” has yet to be fully fleshed out in its detailed provisions.

By contrast, Better Markets, a financial regulatory watchdog, said that “despite opposition from the banking industry, the Fed’s introduction of payments accounts is effectively on a predetermined track,” placing greater weight on the likelihood of implementation. In fact, some fintech and crypto companies are preparing for potential access to Fed accounts by applying for federal trust bank charters.

Meanwhile, there are also wide differences over the design of skinny accounts themselves. The current proposal includes a ban on paying interest, limits on access to the Fed’s discount window, and a daily balance cap (US$500 million or 10% of total assets). Circle and Anchorage Digital, among others, argued the structure is “excessively rigid,” and said access to the Fed’s automated clearinghouse network (FedACH) and permission to pay interest on reserves should be allowed.

The Fed plans to review a final rule based on the submitted comments, and the dispute between the financial industry and the crypto sector over whether to introduce the system and under what specific terms is expected to continue for the time being.