US Banking Associations Seek to Narrow Fed's Proposed Skinny Payment Accounts

Two coalitions of banking associations have submitted separate responses to the Federal Reserve‘s May 2026 consultation on so-called Skinny Payment Accounts, a stripped-down alternative to master accounts that carries direct implications for digital asset firms seeking access to payment infrastructure.

The proposed Payment Account structure would allow access to certain payment systems while prohibiting overdrafts and interest payments, and capping overnight balances. Both industry groups broadly support safeguards but are pushing to constrain the scope of the accounts, reflecting concern that the new vehicle could broaden access in ways incumbent banks find uncomfortable.

The backdrop is a longstanding eligibility problem. Tier 3 institutions, which lack federal deposit insurance and either have no federal supervisor or have a parent company outside Fed oversight, are nominally eligible for master accounts but have in practice almost never received approval. Fed Vice Chair Bowman has described master account access for this category as “unobtanium.” Notably, recent national trust charter applications to the Office of the Comptroller of the Currency (OCC) would still land in Tier 3 unless the applicant’s holding company is also subject to Federal Reserve supervision.

One pressure point worth watching is the push for the Fed to publish a formal interpretation of which institutions are legally eligible. If such a clarification were issued, it could create new challenges by drawing clearer lines around inclusion and exclusion, potentially reshaping the competitive landscape for non-bank and digital asset entities pursuing Fed access.