Trump order presses Fed to review master accounts for crypto

President Trump signed an executive order on May 19 directing the Federal Reserve to review whether non-bank financial firms, including cryptocurrency and fintech companies, should be allowed direct access to Reserve Bank master accounts and the Fed’s payment services.

Master accounts let eligible institutions use Fedwire and other core payment systems for high-value dollar settlement. Under current rules, access is generally limited to depository institutions, so several crypto firms have pursued bank or trust charters to reach the payment rails.

The order, titled “Integrating Financial Technology Innovation into Regulatory Frameworks,” asks federal agencies to identify rules and supervisory practices that may limit financial innovation. It directs the Fed to clarify whether existing law permits broader access, to outline an application process, and to state whether the 12 regional Reserve Banks can independently approve or deny applications. The order does not grant immediate access to any firm.

In March the Federal Reserve Bank of Kansas City approved a limited-purpose payment account for Payward, the parent company of Kraken. That account gives Kraken Financial a restricted connection to Fed payment rails for faster processing of institutional deposits and large transfers, but it excludes privileges such as interest on reserves and access to Fed credit.

The order also asks regulators to review licensing practices, third-party risk guidance and policies that affect partnerships between banks and technology companies.

Ripple has applied for a Fed master account and supports a restricted or “skinny” account that would allow non-bank firms to move reserves and process redemptions more efficiently. Coinbase and Circle operate trust-bank structures that could deepen integration with Fed payment plumbing if a formal access pathway is established. Anchorage Digital has a federal charter. Paxos, BitGo and Fidelity Digital Assets have sought or received approvals tied to national trust bank structures. Those charters and approvals do not automatically grant access to Fed payment accounts.

Rob Nichols, president and CEO of the American Bankers Association, urged regulators to require companies offering bank-like services to meet the same regulatory and consumer-protection standards as banks and added: “Unless everyone is held to the same high standards, the financial system and consumers will be at risk.”

Regulators and bank advocates identified risks that would need management: operational failures or cyberattacks at an entity with direct access could disrupt settlement; weaker anti-money-laundering controls could increase illicit finance risks; and shifts of customer funds away from traditional banks could affect liquidity. Restricted accounts that withhold reserve interest and Fed credit are one proposed way to limit exposure.

The Fed’s review will address legal and operational details, including whether regional Reserve Banks have independent approval authority and what application standards should require.