Crypto and Banks Are Taking Opposite Sides on a New Fed Move

Stablecoin issuer Circle Internet Group and the Blockchain Payments Consortium have officially thrown their weight behind a U.S. Federal Reserve proposal to create a new type of limited-access central bank payment account for fintech and digital asset firms.

The backing comes amid mixed feedback from traditional banking groups, which have expressed concern about widening access to the Fed’s payment system.

The proposal would give qualifying non-bank financial institutions access to parts of the Federal Reserve’s core payment infrastructure without the full privileges associated with a traditional master account.

A More Inclusive and Efficient Infrastructure

According to Circle’s announcement, the limited payment account would help modernize U.S. payments by reducing friction and expanding competition.

Additionally, the system’s structured to preserve safeguards designed to protect the financial system.

Circle described the proposal as a pragmatic and constructive step toward strengthening the domestic payments network.

Therefore, it would enhance resilience and make the infrastructure more inclusive and efficient for consumers and businesses.

Circle emphasized the importance of maintaining risk controls such as prefunding and no daylight overdrafts.

Similarly, the Blockchain Payments Consortium welcomed the proposal as “overdue,” arguing that it could help eliminate anti-competitive practices that concentrate settlement risk among a handful of traditional banks.

Banks Raise Concerns About Central Bank Access

Not all stakeholders are on the same page. Several traditional banking associations have concerns over granting fintech and crypto firms direct access to Federal Reserve payment infrastructure.

Moreover, among the issues raised are questions about supervision, risk management, compliance oversight, and whether firms outside the established regulatory framework should access the central bank’s services.

Under the current proposal, payment accounts would not earn interest nor provide access to Fed credit facilities. Additionally, it would include balance limits to mitigate systemic risk.

As the Fed reviews the feedback, the decision could shape how non-bank financial institutions participate in the U.S. payment ecosystem.

Final guidance or rules on payment accounts could take months, reflecting the complexity of balancing innovation and oversight.

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