FedNow versus The Clearing House: Who Will Win the Fed Payments Fray?

Original Title: Banks Demand Delays as Crypto Firms Push for Fed Payment Access
Original Authors: Emily Mason and Evan Weinberger, Bloomberg
Translation: Peggy, BlockBeats

Editor's Note: The access rules of the U.S. payment system are at a critical juncture. The banking industry wants to continue to control the gateway to the Federal Reserve to prevent a run on banks and regulatory disorder, while crypto and fintech companies seek to bypass bank intermediaries and directly access the core clearing system. Disputes over stablecoin yields, account permissions, and regulatory responsibilities are intertwined, making this institutional debate increasingly heated. The focus of the controversy is no longer on a specific account design, but on who has the right to directly access the core of the U.S. payment infrastructure.

The following is the original text:

The banking industry has officially opposed opening the Federal Reserve's payment system directly to crypto and fintech companies, further escalating the controversy surrounding "who has the right to control the core entrance of the U.S. payment infrastructure."

The Bank Policy Institute, Clearing House Association, and Financial Services Forum have submitted a detailed argument in a joint opinion letter, requesting a mandatory 12-month waiting period before companies are eligible to apply for a payment account. Specifically, these lobbying groups argue that the Federal Reserve should not grant system access to newly licensed stablecoin issuers until they demonstrate the ability to operate safely and soundly. If the dispute escalates to legal proceedings, these arguments could form the basis for further conflict escalation.

At the core of the dispute is whether to allow direct access to the Federal Reserve payment "pipeline," a privilege long monopolized by the banking system. Currently, crypto and fintech companies still rely on partner banks to access payment and anti-money laundering compliance infrastructure support. The proposed "skinny account" concept may allow stablecoin issuers and payment companies to bypass bank intermediaries and directly access the Federal Reserve system.

Banking industry groups believe that a prerequisite for such accounts should be that applicants have at least a 12-month "successful and securely operated track record." They point out that the Federal Reserve lacks sufficient experience with many potential applicant institutions and does not have direct regulatory authority over most of them. In addition, despite the Genius Act being signed into law by the president in July of this year, the specific regulatory framework for stablecoin operators has not yet been fully implemented.

The Bank Policy Institute, the Clearing House Association, and the Financial Services Forum stated in a joint letter submitted on February 6 that while the proposal established some important safeguards for the financial system, it did not necessarily guard against the potential run risk of new chartered entities.

Financial regulation advocacy group Better Markets warned that the overall momentum may not be in favor of banks. Better Markets CEO Dennis Kelleher wrote in a comment, "The Fed's arrangement for providing payment accounts is highly likely to move forward irrespective of opposition." The deadline for public comments was last Friday.

To proactively address these concerns and align with the forthcoming Genius Act-related rules, a large number of fintech and crypto companies have begun applying for a national trust bank charter, with some explicitly stating that their ultimate goal is to apply for access to the Federal Reserve's master account.

As early as 2022, the Fed introduced a tiered review process to evaluate master account applications. Anchorage Digital Bank, holding a national trust bank charter, recently submitted an application as a "Tier 3" entity, which typically signifies the strictest review standards. The American Bankers Association argues that master account access should be limited to "Tier 1" institutions, directly regulated by federal banking agencies, and holding FDIC insurance.

The banking group also notes that new payment accounts should not serve as a "springboard" to the master account, and master account access should always be obtained through a separate application process.

Circle and Anchorage believe that the proposed "skinny accounts" are overly rigid and restrictive in design. For example, the current proposal does not allow account holders access to the FedACH, a payment system processing trillions of dollars in transactions annually. Federal Reserve Governor Christopher Waller previously stated when introducing the account plan last year that skinny accounts would not offer overdraft capabilities or access to discount window financing. Circle noted in its letter that whether FedACH access is granted to payment accounts depends on establishing corresponding controls to prevent overdrafts.

Federal Reserve Board Governor Christopher Waller is seen on Oct. 24, 2025, during a Federal Reserve Board meeting in Washington, D.C., U.S. Photo: Al Drago/Bloomberg.

The Financial Technology Association has also criticized the overnight balance cap. The cap is set at $500 million or 10% of total assets (whichever is lower), with the association arguing that this limit is too harsh for larger payment companies, as these institutions often process daily transaction volumes in the tens of billions of dollars.

Anchorage points out that if this cap were to remain, account holders would have to sweep excess funds overnight into a correspondent banking account at the end of each business day. Additionally, Anchorage also adds that holders of payment accounts should also be able to earn interest on their balances held in the Federal Reserve's reserve account.

This debate unfolds in parallel with another highly sensitive issue: whether cryptocurrency exchanges like Coinbase Global Inc. should be allowed to offer users an incentive tied to their stablecoin balances. Currently, Coinbase Global Inc. offers a 3.5% yield to its USDC balance holders. The banking industry believes that this practice could potentially "siphon off" deposits from the traditional financial system, posing a threat to the banking deposit base. It is this disagreement that has slowed down the progress of relevant legislation.

The White House is reportedly intervening to facilitate negotiations and hopes to broker a solution to this issue by the end of the month.

However, these concerns have not been the central focus of discussions in the context of "skinny accounts."

Financial stability advocates and banking industry groups have both warned that the proposed accounts extend beyond the Federal Reserve's statutory authority and could pose significant systemic risks.

Financial watchdog Better Markets is blunt in its comment letter, stating, "The proposal itself makes clear that the Federal Reserve recognizes that current and prospective access holders of payment accounts pose a massive risk to both the Federal Reserve system and the financial system as a whole. That is why almost the entire proposal is dedicated to risk mitigation."

[Original Article]