Overview
- The Federal Reserve Board opened a 60-day public comment period on May 20 for a proposed “payment account” that would let legally eligible institutions clear and settle payments on Fedwire and FedNow under constrained terms.
- Under the proposal account holders would have no access to intraday credit or the discount window, would not earn interest on balances, would face automated overdraft rejections, and would have closing-balance limits set to expected payment activity with the maximum cap increased from earlier drafts.
- The Board asked regional Reserve Banks to temporarily pause decisions on Tier 3 access requests while it finalizes policy, with staff recommending the pause end on or before December 31, 2026 to ensure consistent treatment across banks.
- The move followed President Trump’s May 19 executive order directing a review of payment-access rules and prompted at least one formal dissent from Fed Governor Michael Barr, who said the proposal lacks sufficient safeguards against illicit finance.
- The proposal does not change who is legally eligible for Fed accounts, builds on the March precedent of a limited account for Kraken Financial, and could speed real-time settlement for some fintech and crypto firms while still limiting usefulness for firms that rely on FedACH or larger overnight balances.