Fed seeks input on ‘skinny’ payment accounts; pauses Tier 3

The Federal Reserve Board released a request for comment and a notice of proposed rulemaking on Wednesday that would create narrow payment accounts for certain fintech and crypto-linked firms and asked regional Reserve Banks to pause Tier 3 master account approvals while the rule is developed.

Under the proposal, eligible nonbank financial firms could hold “skinny” payment accounts at the Fed limited to clearing and settlement. The accounts would not earn interest and would not provide access to central bank liquidity tools such as the discount window or intraday credit. The Fed described the accounts as narrower than full master accounts and without the backstops available to traditional depository institutions.

The Board asked regional Reserve Banks to delay decisions on Tier 3 account-access requests while the rulemaking proceeds. Fed staff estimated the pause would end on or before Dec. 31, 2026. A Feb. 28, 2026 memo listed pending Tier 3 requests, including Kraken Financial, the banking arm of the Kraken cryptocurrency exchange. The Federal Reserve Bank of Kansas City granted Kraken a limited-purpose master account in early March 2026 under a Tier 3 classification.

Fed officials traced the skinny account idea to remarks by Governor Christopher Waller in October, and said policy discussions continued into early 2026. The Board framed the rulemaking as an effort to define narrower Fed access for fintechs and certain nonbank institutions without extending full depository privileges or lender-of-last-resort facilities.

The Board wrote: “The temporary pause will allow the Federal Reserve to solicit and consider public input on payment accounts and to promote consistent implementation.” The notice seeks comment on account structure, eligibility criteria and operational safeguards.

The proposal notes that digital-asset trading platforms would not receive direct master account access through these skinny accounts. Exchanges would need to operate through an affiliate that qualifies as an eligible depository institution under the Federal Reserve Act to connect directly to Fed payment services.

The request for comment and the temporary suspension of Tier 3 approvals are intended to give the Fed time to collect public feedback and align practices among regional Reserve Banks before finalizing a policy.