The Federal Reserve's payment account proposal nominally gives crypto companies a path to connect directly to the central bank's payment system without going through a partner bank. But a closer look at the proposal's design shows it is more like a limited entry point with heavily stripped-down functionality, rather than a shortcut that would let crypto companies truly "bypass" partner banks. For the vast majority of crypto companies, partner banks will remain necessary for the foreseeable future—the reason just shifts from "the only option" to "the most practical option."
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What the Proposal Gives—and Takes Away
In May 2026, the Federal Reserve formally opened a public comment period on its proposed "Payment Account." The positioning of this account is clear: it is only for clearing and settlement, not a full Master Account.
The permissions crypto companies could obtain include access to the Fedwire Funds Service, the FedNow instant payment service, and the National Settlement Service (NSS). These are real-time gross settlement systems where transactions are processed individually and finalized instantly. The Federal Reserve can use automated controls to reject transactions that would cause an overdraft.
But the proposal also removes several things that are crucial to the daily operations of crypto companies:
No FedACH access. This is the most critical restriction. FedACH handles batch, deferred-settlement everyday payments such as payroll and bill payments. If a crypto company needs to process customer USD deposits and withdrawals, merchant settlements, or payroll payments, ACH is almost unavoidable. The Federal Reserve's reasoning is that ACH's deferred settlement and batch processing architecture cannot effectively prevent overdrafts through automated controls. The only way to eliminate credit risk would be to prohibit payment account holders from receiving any debit transactions, which would be "unprecedented" in the ACH network and would seriously undermine network efficiency. Anchorage Digital stated bluntly in its comment letter that a payment account without FedACH access is "not a workable substitute for a master account," because the holder would still need to rely on intermediaries to complete everyday payments and settlements.
Cannot act as a correspondent bank. Payment account holders cannot act as a correspondent to settle for other institutions, nor can they settle their own activities through another institution's master account. This means that even if a crypto company obtains a payment account, it cannot use it to serve the settlement needs of its institutional clients or partners.
No interest, no discount window, and an overnight balance cap. Balances earn no interest, holders cannot borrow intraday credit from the Federal Reserve or use the discount window, and the overnight balance cap is set at a maximum of $1 billion, calibrated to the institution's expected payment activity. These restrictions collectively reduce the practical value of the payment account.
Why Partner Banks Remain Unavoidable
When you piece together the restrictions above, what a crypto company holding a payment account can actually do is quite narrow: it can directly send and receive certain payments through Fedwire or FedNow on its own, but the moment ACH debits are involved—such as customers debiting their bank accounts to buy crypto or automatic merchant billing—or when it needs to provide settlement services for third-party institutions, it must go back to a partner bank.
This is the core paradox of the proposal. One of the motivations for crypto companies to pursue direct access is precisely to reduce dependence on partner banks, lower intermediary costs, and reduce counterparty risk. Yet the payment account's design preserves the necessity of intermediaries exactly where crypto companies most want to escape them—ACH and correspondent banking services. The Federal Reserve acknowledges in the proposal that institutions needing ACH access "should apply for a full master account or continue using a correspondent relationship." And a full master account has an extremely high threshold for crypto companies; applications from Tier 3 institutions were already recommended for suspension before the proposal was finalized.
The stance of traditional banking associations also confirms this from the opposite direction. The Bank Policy Institute, The Clearing House Association, and the Financial Services Forum supported restricting FedACH access in a joint comment letter, arguing that allowing institutions not subject to federal prudential supervision to access systems involving everyday consumer payments would constitute an "unacceptable risk." The community bankers association's comment was even more direct: if emerging financial institutions are not eligible for a full master account, then no alternative review tier exists that would make them eligible for the partial benefits of a "streamlined" account.
Who Might Actually Benefit—and Who Barely Can Use It
The payment account means very different things for different types of crypto companies. Large institutions with bank or trust charters—such as federally chartered national banks like Anchorage Digital—could theoretically use the payment account in certain wholesale payment scenarios, but they are already applying for full master accounts, so the payment account's limited functionality holds little appeal for them. Anchorage's comment letter explicitly stated that the payment account is "not a workable substitute" for a master account and noted that its restrictions "materially limit the functionality of the payment account."
Crypto exchanges or payment companies without bank charters, even if they legally qualify to apply (the proposal explicitly does not expand the statutory eligibility criteria and only targets institutions that were already eligible to open accounts at Reserve Banks), would still need to rely on partner banks for ACH and correspondent services after obtaining a payment account. What they get is a "partially direct" channel, not a replacement for partner banks.
The institutions that might genuinely benefit from the payment account are those whose payment activity is primarily real-time settlement through Fedwire or FedNow and that do not need ACH or correspondent banking services. But this profile is not typical in the crypto industry. Crypto companies' USD operations heavily involve ACH deposits and withdrawals, batch merchant settlements, and correspondent settlements for institutional clients—precisely the areas that the payment account either prohibits or fails to cover.
What to Watch
The final form of the proposal is not yet determined. The comment period had already received nearly a hundred comment letters by around July 2026. Federal Reserve Governor Waller indicated that a final framework could be released before the end of 2026, while Governor Barr, the sole dissenting vote, believes anti-money laundering safeguards remain inadequate.
To judge whether this proposal truly changes crypto companies' dependence on partner banks, several specific signals need to be watched: whether the final rule relaxes FedACH access (currently the likelihood appears very low, as the Federal Reserve's argument is quite firm); whether the overnight balance cap is further lowered (the three major banking associations suggested reducing it from $1 billion to $500 million); when full master account applications for Tier 3 institutions resume (the suspension itself reinforces the necessity of partner banks). Until these signals become clear, interpreting the payment account as a channel for "crypto companies to bypass partner banks" would overestimate its actual role. It is more like a supplementary tool designed for specific wholesale payment scenarios, not a solution that replaces the existing intermediary structure.
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References
- Global Financial Regulatory Blog·President Trump Issues Executive Order on Fintech Innovation, While FRB Proposes Payment Accounts, 2026-10-31
- Federal Reserve·Staff Memo on Proposed Payment Account, 2026-10-31
- Federal Reserve·Board requests public comment on a proposal to establish a "payment account", 2026-10-31
- CoinDesk·Federal Reserve proposes limited master accounts long pursued by crypto firms, 2026-10-31
- The Block·Anchorage Digital says Fed's proposed payment account is no 'workable substitute' for master account, 2026-10-31
- Mobile Payment Network·Three Major US Banking Associations Jointly Comment! "Payment Account" Needs Stronger Controls, 2026-10-31
- Federal Register·Proposed Revisions to the Federal Reserve Policy on Payment System Risk, 2026-10-31
- Community Bankers Association of Illinois·Comment Letter on Payment Account Prototype, 2026-10-31
- KuCoin·Federal Reserve Releases Proposed Rules for "Streamlined Master Account", 2026-10-31
