Stablecoins Get a Fed Pass, But Banks May Lose Out
A Significant Shift in Policy
The Federal Reserve is making a notable shift in its approach to stablecoin companies. On October 21, Governor Christopher Waller proposed a special payment account. This account allows stablecoin issuers and crypto firms to access Fed payment systems, though not with the same level of access as traditional banks.
The "Skinny" Account
Waller referred to this new account as a "skinny" account. It provides basic access to Fedwire and ACH systems but does not offer interest payments, overdrafts, or emergency loans. This is a significant change, as the Fed has historically been cautious about engaging with crypto firms.
Potential Impact on Stablecoins
This new account could revolutionize how stablecoins operate. Currently, stablecoin issuers typically partner with banks to handle dollar transactions. With this new account, they may be able to conduct these transactions directly with the Fed, potentially making the process faster and more efficient.
Limitations and Concerns
However, there are some limitations. The account has balance caps and does not offer interest. Large stablecoin issuers like Tether hold billions in reserves, and these strict caps may not be sufficient to meet all their needs. As a result, they may need to split their reserves between the Fed and commercial banks.
Impact on Traditional Banks
Some industry experts, like Arthur Hayes, co-founder of BitMEX, believe this could negatively impact traditional banks. If large issuers and payment processors start using Fed rails directly, they may not need banks as much. This could erode bank deposit bases and concentrate liquidity at the Fed.
Balancing Innovation and Risk
The Fed aims to support payments innovation while minimizing risk. The restrictions on the new account are designed to strike a balance between these two goals. Waller has invited stakeholder feedback but has not set a timeline for implementation.
Context and Timing
This move comes after the GENIUS Act was signed in July 2025. The act established federal stablecoin requirements but did not grant direct Fed access. Waller's proposal fills this gap and may expedite decisions for firms with pending applications.
Integration of Crypto into Payments
This policy shift signifies the integration of crypto into the payments system. It aims to reduce fragility and acknowledges that digital assets are now central to how dollars move. However, it also creates a level playing field while potentially disintermediating some bank services.
