U.S. Congress discusses the Federal Reserve's "streamlined main account" and evaluates whether crypto and fintech companies can directly connect to the central bank's payment system.

The U.S. House Financial Services Committee held a hearing on Wednesday to discuss the evolving roles of banks and fintech companies. One key focus was the Federal Reserve’s consideration of a “streamlined master account” proposal, which would allow certain crypto banks and fintech companies limited direct access to the Federal Reserve’s payment system. A Federal Reserve master account enables financial institutions to use the Fed’s payment network directly and have the most direct access to the U.S. dollar system. Institutions without such an account typically need to rely on correspondent banks that possess master accounts to offer related services.

The so-called “streamlined accounts” are more limited in function and are intended to provide new financial institutions with restricted access. At the hearing, Republican Congressman Dan Meuser stated that access to the Federal Reserve’s payment system is no small matter and that the core question is which institutions should be allowed direct access to these critical payment rails. Traditional institutions such as community banks are concerned that crypto and fintech companies are not subject to the same strict regulatory standards and that direct access may bring security and soundness risks. The crypto industry, on the other hand, generally supports the proposal, arguing that direct access to the Fed’s payment system should have been opened long ago as it would reduce reliance on intermediary banks and foster innovation.

In May this year, Trump also signed an executive order directing the Federal Reserve to assess policies for opening central bank payment rails to fintech companies, including crypto firms. Previously, in March, the Kansas City Fed approved a “limited purpose account” for Payward, the parent company of an exchange, sparking market debate over how much crypto and fintech companies should be allowed direct access to Federal Reserve services. At the hearing, a representative from Anchorage Digital stated that if the U.S. wants to maintain its position as a global financial center, it needs to allow for innovative federal and state regulatory frameworks.