State of Crypto: Skinny Master Accounts and Stablecoins

Fed. Governor Waller's proposal could boost stablecoin firms in the U.S.

Oct 25, 2025, 2:00 p.m.

Federal Reserve Governor Christopher Waller floated the idea of the central bank creating a "skinny master account" for crypto firms which would grant them access to the Fed's payment rails while keeping them away from a full Fed master account.

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The narrative

Federal Reserve Governor Christopher Waller suggested this week that crypto companies could use a limited version of the Fed's master account system, which would let these firms access U.S. payment rails while limiting their exposure to certain risks the Fed would want to avoid.

Why it matters

Firms like Custodia have already spent years trying to gain access to a Fed master account, which would give them a direct line to the central bank's payment infrastructure and relieve them of the need to work with an intermediary bank. Waller's proposal for a more limited access could benefit stablecoin issuers in particular (and by extension, the broader crypto sector).

Breaking it down

Under Waller's proposal, which he called a "skinny master account," the Fed would let companies access its payment rails, but not "the full suite of Federal Reserve financial services," he said during his opening remarks at the Fed's Payments Innovation Conference on Tuesday.

"To control the size of the accounts and associated impacts on the Fed's balance sheet, the Reserve Banks would not pay interest on balances in a payment account, and balance caps may be imposed," said Waller. "These accounts would not have daylight overdraft privileges — if the balance hits zero, payments will be rejected. They would not be eligible for discount window borrowing or have access to all Federal Reserve payment services for which the Reserve Banks cannot control the risk of daylight overdrafts."

Linda Jeng, the CEO of Digital Self Labs and a lecturer at Georgetown University, likened Waller's proposal to the idea of narrow banks, which act as banks but do not loan funds.

"Payment stablecoin issuers already operate as a form of narrow bank — holding fully-backed reserves and facilitating payments rather than lending. Yet the GENIUS Act does not grant them direct access to Fed payment rails, the one step that would integrate these stablecoin issuers into the U.S. monetary system," she wrote in an opinion piece for CoinDesk.

This would have the added benefit of ensuring stablecoin issuers are backed by the Fed itself, giving the Fed more tools to manage any possible systemic risks, she wrote.

Waller's proposal in particular may benefit stablecoin issuers, particularly in light of the GENIUS Act and the rapid ongoing growth of this segment of the crypto market. Multiple companies have applied for master account access already in hopes of moving past working with third-party banks.

Former World Bank President David Malpass said at ACI Worldwide's payments summit that the proposal, if enacted, would help "defend the dollar's purchasing power," according to a transcript of his comments shared with CoinDesk.

"There's a global competition for market share in stablecoins," he said.

Waller noted in his speech that "this is just a prototype idea to provide some clarity on how things could change."

"As Federal Reserve staff examine this idea, we will engage with all interested stakeholders to hear perspectives on the benefits and drawbacks to this approach," continued Waller. "You will be hearing more about this shortly."

Thursday

• 14:00 UTC (10:00 a.m. ET) The Senate Banking Committee said it would hold a nomination hearing on a number of candidates, including for Travis Hill to become the chair of the Federal Deposit Insurance Corporation (Hill is currently the acting chair).

If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at [email protected] or find me on Bluesky @nikhileshde.bsky.social.

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See ya’ll next week!

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