Fed Proposes Limited Payment Accounts for Fintechs, Pausing Existing Requests as Trump Pushes Wider Access
Updated
Updated · Reuters · May 20
Fed Proposes Limited Payment Accounts for Fintechs, Pausing Existing Requests as Trump Pushes Wider Access
9 articles · Updated · Reuters · May 20
The Federal Reserve proposed a new payment account that would let eligible fintech and other nontraditional firms use its payment rails without full bank privileges.
Those accounts would exclude intraday credit, discount-window borrowing and interest on reserves, limiting access to payments while withholding key Fed backstops.
Regional Fed banks were told to pause decisions on pending requests from nontraditional firms while the proposal is under review to ensure consistent treatment.
Banks have warned direct access for lightly regulated fintech and crypto firms could create operational and liquidity risks, and Governor Michael Barr dissented over illicit-finance safeguards.
The move came a day after President Donald Trump ordered a review of payment-account policy to explore broader access, following years of pressure from fintech and crypto firms.
As the Fed enables faster payments, can it prevent the faster money laundering that global watchdogs warn about?
Is the Fed's new account a lifeline for fintech innovators or a direct challenge to traditional banking's dominance?