For years, the argument over Federal Reserve account access has largely centered on who gets in.
The latest executive and regulatory moves suggest the next phase of the discussion may be about what happens after entry, especially for FinTechs that would conceivably clamor for access.
President Donald Trump’s Tuesday (May 19) executive order, “Integrating Financial Technology Innovation Into Regulatory Frameworks,” directs federal agencies to examine access to regulated financial infrastructure, stating that federal policy should “streamline regulatory processes, reduce unnecessary barriers to entry, and encourage collaboration between FinTech firms, federally regulated financial institutions, and Federal financial regulators.”
One of the order’s most consequential instructions falls directly on the Federal Reserve. The Fed is asked to conduct a “comprehensive evaluation” of the legal, regulatory and policy framework governing access to Reserve Bank payment accounts and services by uninsured depository institutions and nonbank financial companies.
There’s a wide berth of would-be participants, including firms engaged in digital assets and other novel financial activities. FinTechs are defined in the order as offering “any application or any digital or online technology that facilitates access to, management of, or data processing for financial products or services. Such financial products or services may include, but are not limited to, payment processing, lending, deposit-taking, derivatives, investment management, brokerage services, underwriting and capital-market activities,” among other endeavors.
The Fed’s Follow-Up
The Fed followed with a Wednesday (May 20) proposal and request for comment that offers a narrower path than broad master account access. The proposal is not a direct response to the White House, but it does signal an eventual meeting of evolving policies that converge on banking and FinTechs’ role within banking.
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Rather than extending full Federal Reserve participation rights, the board proposed a new category of special-purpose “payment accounts” designed to clear and settle payment activity while intentionally excluding several of the traditional benefits associated with Reserve Bank accounts.
The proposal would revise both the Payment System Risk Policy and the Account Access Guidelines to accommodate these accounts while pausing decisions on certain Tier 3 account requests during policy development.
Under the proposal, payment account balances would not earn interest, account holders would not receive discount window access, and they would not have access to Federal Reserve intraday credit. Instead, access would be limited to payment services where automated controls can prevent overdrafts, including the Fedwire Funds Service and the FedNow® Service.
That design points to what may be a central policy compromise emerging from Washington, which is more direct participation in payment rails without extending the broader public-sector support mechanisms built around the banking model.
For FinTechs, direct settlement could reduce reliance on sponsor banks and correspondent relationships. Firms focused on payments have argued that direct access may lower transaction costs, increase settlement speed and reduce concentration risk created by dependence on a small number of intermediaries. The Fed acknowledged those arguments directly in outlining the proposal.
Real-time settlement may create room for new treasury management models, tighter liquidity positioning and products built around always-on money movement rather than banking cutoffs.
But the proposal also makes clear that access does not reduce responsibility.
The Fed repeatedly framed payment accounts as a lower-risk structure only because they are paired with explicit controls and governance expectations. Payment account holders would still be expected to satisfy the risk-management standards embedded in the Account Access Guidelines and maintain operational and compliance frameworks appropriate for direct infrastructure participation.
Anti-money laundering controls, fraud monitoring, sanctions compliance, operational resiliency and liquidity planning become harder to outsource. The Fed proposed closing balance limits tied to payment activity, with individual limits set by Reserve Banks and capped at $1 billion, while continuing to prohibit access to intraday credit.
The board also said all account holders must demonstrate robust Bank Secrecy Act/AML and sanctions compliance programs and show they can manage illicit finance risk associated with account access.
The executive order opened the door to reconsidering access, but defining the obligations (and satisfaction of those obligations) will bring scrutiny of readiness.
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