Trump Orders Fed To Review Crypto Access To U.S. Payment Rails

"The order, titled “Integrating Financial Technology Innovation into Regulatory Frameworks,” calls on the heads of federal financial agencies to audit existing rules within three months and identify regulations that “unduly impede” fintech firms from partnering with federally regulated institutions. Within six months, regulators must act on what they find. The order puts the central bank at the center of a fight that has been building for years, as it directs regulators to tear down barriers that have long kept crypto and fintech firms on the outside of the U.S. payment system."

"At its core, the order targets the Federal Reserve's control over master accounts - the gateway to payment rails like Fedwire that handle high-value dollar settlement across the financial system. Those accounts have historically been reserved for licensed depository institutions, a wall that forced crypto companies seeking direct payment access to pursue costly state or federal banking charters. The order asks the Fed to do two things: evaluate whether its framework can be extended to non-bank fintech and crypto firms, and clarify whether the 12 regional Federal Reserve banks have independent authority to approve or deny master account applications without direction from the Board of Governors in Washington."

"That second question carries real weight. If regional banks can act alone, crypto firms could potentially shop for a sympathetic Fed branch - a scenario that already played out in March, when the Kansas City Fed approved a limited-purpose account for Payward, the parent company of Kraken, making it the first crypto exchange to win any form of Fed payment access. Kraken Co-CEO Arjun Sethi called the arrangement the “convergence of crypto infrastructure and sovereign financial rails.”"

An executive order titled “Integrating Financial Technology Innovation into Regulatory Frameworks” directs federal financial agencies to review existing regulations within three months and identify rules that unduly impede fintech firms from partnering with federally regulated institutions. Regulators must take action within six months based on their findings. The order focuses on Federal Reserve control over master accounts, which provide access to payment rails such as Fedwire for high-value dollar settlement. Master accounts have historically been limited to licensed depository institutions, requiring crypto firms to pursue costly banking charters. The order asks the Fed to assess whether its framework can extend to non-bank fintech and crypto firms and to clarify whether regional Federal Reserve banks can approve master account applications independently of the Board of Governors. Regional bank authority could allow crypto firms to seek favorable approvals, as seen when the Kansas City Fed approved a limited-purpose account for Payward, the parent of Kraken.

Read at Bitcoin Magazine