Crypto and Banks Clash Over Fed’s Proposed Accounts
- Fed proposes ‘skinny’ accounts; Crypto and banks express concerns.
- Proposal targets direct Fed payment access for crypto firms.
- Impact includes regulatory and financial implications for stakeholders.
Crypto firms and banks are in conflict over the Federal Reserve’s proposed ‘skinny’ accounts as a White House crypto meeting approaches, highlighting concerns about regulatory controls and payment innovation.
The Fed’s proposal could revolutionize payment systems by offering direct payment access to crypto companies, while banks worry about the potential risks of money laundering and oversight.
The Federal Reserve has proposed ‘skinny’ master accounts designed to innovate payments. Banks worry about money laundering while crypto firms seek additional features. Circle Internet Group has supported these accounts as useful for stablecoin issuers.
Federal Reserve Governor Christopher Waller acknowledged diverse feedback, highlighting banks’ concerns about regulatory controls. The proposal restricts accounts to no-interest and prefunded transactions. Visa raised concerns about regulatory risks.
Industry sentiment shows crypto firms and fintechs favor direct access to Fed payment services, reducing bank reliance. However, banking entities fear that these could increase illicit finance risks without proper oversight.
The friction between banks and crypto firms underscores financial and regulatory implications. The American Bankers Association and Wisconsin Bankers Association flagged concerns over governance and balance limits in the proposal.
Crypto firms believe the proposal could streamline operations, but banks remain cautious. Christopher Waller seeks a middle ground amid conflicting views. “Seeks ‘middle lane’ amid conflicting bank/crypto feedback.” – Christopher Waller, Federal Reserve Governor. Anchorage Digital Bank emphasized the need for balance limit revisions in the proposed framework.
Insights suggest potential for changes in financial, regulatory, or technological outcomes. The Fed’s proposal may lead to newer payment innovations but will require careful implementation to balance stakeholder interests and arguments.
