The Federal Reserve voted 6-1 on May 20 to advance a formal proposal creating a new category of “payment accounts” that would give fintech firms and other non-traditional institutions direct access to Fed payment rails, without the full scope of a master account. The proposal follows President Trump’s executive order the prior day directing the Fed to consider how it can expand payment system access for uninsured banks, crypto firms, and other “novel” nonbanks.
The payment accounts would allow firms to clear and settle transactions directly over certain Fed systems, but would be narrow: no discount window access, no non-payment services, and no expanded charter eligibility. Balance caps originally proposed at $500 million were replaced with activity-based limits of up to $1 billion, to be set by regional reserve banks.
Critically, the Fed is also temporarily pausing decisions on pending Tier 3 master account applications (the highest-scrutiny category, for firms without federal insurance) while it works through the payment account rulemaking. Roughly 20 such applications were pending. The pause is expected to end no later than December 31. Gov. Michael Barr dissented, arguing the proposal lacks adequate anti-money laundering guardrails and does not give the Fed examination authority over account holders for AML compliance.
Correspondent Banking Note: For community banks with correspondent banking relationships, this is an important development. A world where fintechs have direct Fed payment rail access — even in a limited form — changes the competitive calculus for payment services. The pause on Tier 3 master accounts may slow crypto firm entry into payments for a few months, but the directional trend is clear.
Federal Register source: https://www.federalregister.gov/documents/2026/05/26/2026-10375/proposed-revisions-to-the-federal-reserve-policy-on-payment-system-risk-and-the-guidelines-for