The Trump administration is moving to open the Federal Reserve’s payment system to crypto firms, marking what could become of the most significant integrations yet between digital assets and the traditional banking system.
The push follows the approval of Kraken’s “skinny” Fed account, a breakthrough that may pave the way for other crypto companies to gain direct access to the Fed’s financial infrastructure.
An executive order titled “Integrating Financial Technology Innovation into Regulatory Frameworks” asks the Fed to review its approach to granting access to payment accounts and services, and to consider ways to expand access for fintechs and other non-banks. It also calls on federal agencies to remove policies deemed “overly burdensome.”
The order could ultimately allow crypto firms to move assets over Fedwire and the FedNow instant payment service, much as Kraken can now do through its skinny account. A master Fed account would also give firms the ability to earn interest on overnight balances and potentially access the Fed’s discount window.
Bringing Crypto Firms into the Fold
Historically, these accounts have been reserved for insured depository institutions. Both the executive order and Kraken’s approval suggest the Fed may now be open to separating payment access from the broader regulatory obligations that come with traditional banking. The timing is also notable—the order arrived just days after Trump’s handpicked chair, Kevin Warsh, took over leadership of the Federal Reserve.
“Kraken received a limited, controlled account that is supposed to test whether a digital asset firm with a state banking charter can connect to payment infrastructure without receiving the full privileges of a traditional bank,” said James Wester, Director of Cryptocurrency at Javelin Strategy & Research. “That distinction matters, because the policy question is no longer whether crypto firms should be kept outside the banking perimeter. They’re already inside that perimeter in the sense that businesses and consumers are accessing digital assets and crypto now.”
“The question then is whether those firms can be brought closer to the payment system in ways that make that access safer, cheaper, and more efficient while providing smart limits around settlement activity, compliance, and supervisory oversight,” he said.
Ripple Effects
If the order is implemented, crypto firms Ripple and Anchorage Digital have indicated they may pursue master accounts, with other firms likely to follow. Money transfer company Wise has also expressed interest in obtaining a Fed account.
“Crypto is a clear use case, but the bigger issue is how the Federal Reserve should handle institutions that are not traditional insured banks,” said Wester. “Those are all becoming more important to payments, settlement, and infrastructure. The Fed is trying to define access in a way that acknowledges how important those non-traditional players are but without putting the payment system at risk.”
“Will that definition mean limited access, no intraday credit, no discount window access like Kraken received?” he said. “That seems likely, but then the question becomes whether the powerful bank lobby will accept that as a reasonable compromise.”
