Federal Reserve Access for Fintechs: Executive Order and Federal Reserve Payment Account Proposal Signal Potential New Era for Fintech Payment Access

On May 19, 2026, President Donald Trump signed an Executive Order titled “Integrating Financial Technology Innovation into Regulatory Frameworks” (the “EO”), directing federal financial regulators to streamline regulations and reduce barriers to entry for financial technology firms. The EO separately requests that the Board of Governors of the Federal Reserve System (the “Federal Reserve” or the “Board”) conduct a comprehensive evaluation of the legal, regulatory, and policy framework governing access to Federal Reserve Bank (“Reserve Bank”) payment accounts and payment services by “uninsured depository institutions and non-bank financial companies, including those engaged in digital assets and other novel financial activities (collectively, covered firms), and those functioning as direct participants in real-time (instant) payment networks.” This language contemplates potential expansion of Federal Reserve payment services access beyond entities that are currently legally eligible under the Federal Reserve Act.

The following day, the Federal Reserve issued a notice and request for comment proposing revisions to the Federal Reserve Policy on Payment System Risk (the “PSR Policy”) and the Guidelines for Evaluating Account and Services Requests (“Account Access Guidelines”) to accommodate the provision of special-purpose accounts the Proposal terms “Payment Accounts” by Reserve Banks (the “Proposal”). The Proposal builds upon the Board’s December 23, 2025 Request for Information on the Payment Account prototype (the “RFI”), which itself followed Federal Reserve Governor Christopher J. Waller’s October 2025 introduction of the “skinny” master account concept, as discussed in our prior Legal Update. Notably, the Proposal does not expand legal eligibility for Reserve Bank accounts. It streamlines the application process for institutions that are already legally eligible—primarily depository institutions—but may have been deterred from seeking a Master Account by the length and uncertainty of the existing review process.

The comment period for the Proposal will close on July 27, 2026.

Key Takeaways

• Introducing the Payment Account, a new, limited-purpose account option. The Proposal would create a special-purpose “Payment Account” at Reserve Banks. This account is distinct from a full-service Master Account. It includes standard risk-reducing terms: no intraday credit, no discount window access, and no interest on balances. There would be a cap on overnight balances (the “Closing Balance Limit”) not to exceed $1 billion. Access would be limited to certain real-time gross settlement and instant payment services. Notably, FedACH would not be included.
• An option targeted towards Tier 2 and Tier 3 institutions—a limited universe. Under the Account Access Guidelines, non-federally insured institutions fall into tiers. Tier 2 includes those subject to federal prudential banking supervision that meet certain holding company requirements. For state-chartered institutions, this means having a holding company subject to Federal Reserve oversight (by statute or commitment). For federally chartered institutions, the same holding company requirement applies. All other non-federally insured institutions are Tier 3. Any legally eligible institution may request a Payment Account. However, the Board expects most requesters to be non-federally insured depository institutions—a relatively small group that includes state-chartered special purpose depository institutions (such as Wyoming SPDIs), stablecoin issuers that have obtained depository institution charters, and other payments-focused entities that have pursued novel charter types. Most fintech firms are not depository institutions and would not be eligible for a Payment Account under the Proposal. For those firms, the EO’s request that the Federal Reserve evaluate expanded eligibility for “non-bank financial companies” is the more relevant development.

I. Background

A. The EO: White House Policy on Fintech Access

The EO declares it “the policy of the United States to streamline regulatory processes, reduce unnecessary barriers to entry, and encourage collaboration between fintech firms, federally regulated financial institutions, and Federal financial regulators.” The EO defines “fintech firm” broadly. It includes any non-bank company that uses or develops technology to offer or support financial products or services. This expressly covers payment processing, deposit-taking, digital asset-related services, and blockchain-based services.

Section 3 of the EO directs the head of each “Federal financial regulator” to conduct a review within 90 days. These regulators include the Consumer Financial Protection Bureau (“CFPB”), the Securities and Exchange Commission (“SEC”), the National Credit Union Administration (“NCUA”), the Commodity Futures Trading Commission (“CFTC”), the Federal Deposit Insurance Corporation (“FDIC”), and the Office of the Comptroller of the Currency (“OCC”). The review must cover existing regulations, guidance, supervisory practices, and application processes that could be updated to foster innovation and competition. These federal financial regulators must take steps to encourage innovation within 180 days.

Section 4 separately requests the Federal Reserve to perform a comprehensive evaluation of the legal, regulatory, and policy framework governing access to Reserve Bank payment accounts and services. The EO expressly says that this evaluation should cover uninsured depository institutions and non-bank financial companies, including those engaged in digital assets and other novel financial activities, and firms functioning as direct participants in real-time payment networks. The EO asks the Board to submit a report to the President within 120 days. The report must assess: (i) the Federal Reserve’s legal authority under the Federal Reserve Act to extend direct access to covered firms; (ii) options for expanding such access subject to proper risk management; (iii) legal impediments and legislative or regulatory options to enable access; and (iv) whether, and to what extent, individual Reserve Banks have independent legal authority to grant or deny access and what Board-level policies ensure consistent evaluation. If the Board determines that existing law permits access for covered firms, Section 4(c) requests the creation of transparent application procedures with decisions on complete applications within 90 days. 

B. Evolution of the Payment Account Concept

In October 2025, Governor Waller introduced the concept of a “skinny” master account. This would provide payment system innovators with limited access to Federal Reserve payment services without all the features of a full Master Account. In March 2026, the Reserve Bank of Kansas City put that concept into practice. It granted a one-year, “limited purpose” account to a digital asset firm.

On December 23, 2025, the Board published the RFI seeking public input on the Payment Account prototype. The RFI described a special-purpose account with an overnight balance limit set at the lesser of $500 million or 10% of the account holder’s total assets. There would be no interest on balances. There would be no access to intraday credit or the discount window. Access would be limited to services with automated overdraft-prevention controls.

The Board describes the Proposal as “substantially similar” to the RFI prototype, with certain modifications responsive to commenter feedback, including changes to the closing balance methodology and amount. 

II. Payment Account Proposal

A. Eligibility

Under the Proposal, eligibility for a Payment Account would match eligibility for a Master Account. Any institution that meets the legal eligibility requirements for an account under the Federal Reserve Act or other federal statute may request a Payment Account. Critically, the Proposal does not expand or change legal eligibility, which under existing law is limited to depository institutions. Institutions would generally be limited to one account with a Reserve Bank—either a Payment Account or a Master Account. Exceptions would apply in limited cases, such as transition periods following mergers.

While institutions from any tier under the Account Access Guidelines may request a Payment Account, the Board anticipates most requesters would be Tier 2 or Tier 3 institutions. The scope of eligible institutions under the Proposal contrasts with the EO. The EO requests that the Board evaluate its authority to provide payment systems access to both uninsured depository institutions and “non-bank financial companies”—a category that would include most fintech firms that have not obtained a depository institution charter.

Payment Account Terms

The Board proposes to document the Payment Account’s standard terms in a new Part IV of the PSR Policy, with additional terms implemented through amendments to the Account Access Guidelines, Regulation A, and Regulation D. A summary of the key terms follows:

• Closing Balance Limit: The Reserve Bank would set an individual Closing Balance Limit for each Payment Account. This limit would not exceed $1 billion. It would be based on the Reserve Bank’s analysis of the Payment Account holder’s expected payment flows—especially at the start of the Federal Reserve’s business day. The analysis would also consider periods when external sources of liquidity may be limited, such as weekends and holidays. This represents a major change from the RFI’s proposed limit of the lesser of $500 million or 10% of total assets. Commenters argued that an asset-based limit might not reflect a payment-oriented institution’s actual payment needs. There would be no intraday balance limit. The Closing Balance Limit would be reviewed by the Reserve Bank at least yearly. In unusual cases, a Reserve Bank may briefly permit an institution to exceed its limit, subject to Board consultation requirements.
• No Interest on Balances: Consistent with Regulation D, Payment Account holders would not receive interest on balances held at a Reserve Bank.
• No Access to Reserve Bank Credit: Payment Account holders would not be permitted to access credit from the discount window (pursuant to a proposed amendment to Regulation A) or to incur daylight overdrafts. Transactions that would create an overdraft would be automatically rejected.
• Available Services: Payment Accounts would only have access to services with automated controls to reject transactions that would cause an overdraft. These include the Fedwire Funds Service, the FedNow Service, the National Settlement Service, and the Fedwire Securities Service for transfers free of payment. FedACH services would not be available. The Board found there is no reasonable way to allow Payment Accounts to access FedACH and effectively reduce credit risk without disrupting the ACH network.
• Correspondent/Respondent Prohibition: A Payment Account holder would not be permitted to act as a “Correspondent” or “Respondent” as those terms are defined in Operating Circular 1. This means it could not allow other institutions to settle payment activity through its Payment Account. It also could not settle its own activity through another institution’s Master Account.
• Illicit Finance Risk Mitigants: A Reserve Bank may, at its discretion, require a Payment Account holder to provide information showing its compliance with BSA/AML and Office of Foreign Assets Control requirements. This may include independent third-party assessments, attestations, copies of audit reports, regular meetings, and notice of enforcement actions or material deficiencies.
• Discretion to Impose Other Terms: Reserve Banks would retain discretion on a case-by-case basis to impose additional terms, restrict access to services, or close an account to manage risks. 

B. Review Timelines

The Proposal introduces indicative timelines for reviewing access requests:

• Tier 1 institutions (all account types): 45 calendar days from receipt of all requested documentation.
• Tier 2 and Tier 3 institutions (Payment Account requests): 90 calendar days from receipt of all requested documentation.
• Tier 2 and Tier 3 institutions (Master Account requests): No specified timeline, given the variety of charter types, business models, regulatory regimes, and risk profiles involved.

If a Reserve Bank requires additional time beyond the relevant indicative timeline, it would be expected to consult with the Board.

C. Pause Tier 3 Decisions

The Board is urging Reserve Banks to pause decisions on access requests from Tier 2 and Tier 3 institutions until the Board completes its policy development process. The Board currently expects the pause to end on or before December 31, 2026. The pause language applies to Tier 2 and Tier 3 institutions broadly. However, the Board’s press release refers specifically to Tier 3 institutions.

III. Interplay Between the EO and the Proposal

The EO and the Proposal were released within roughly 24 hours of each other. While the timing is notable, the two actions address different questions and should not be conflated. The Proposal is the product of a policy development process that began with Governor Waller’s October 2025 remarks and continued through the December 2025 RFI—predating the EO by more than six months. The Proposal streamlines the process for institutions that are already legally eligible for Reserve Bank accounts; it does not expand legal eligibility. The EO, by contrast, requests the Federal Reserve to evaluate whether legal eligibility could or should be expanded to reach non-bank financial companies that are not currently eligible.

Section 4(b) of the EO requests the Federal Reserve to submit a report to the President within 120 days (i.e., by about September 16, 2026). The report must assess: (i) the Federal Reserve’s legal authority under the Federal Reserve Act to extend direct access to Reserve Bank payment accounts and payment services to “covered firms” (defined to include both uninsured depository institutions and non-bank financial companies); (ii) options for expanding such access to the extent permitted by law, subject to appropriate risk management requirements; (iii) legal impediments that preclude direct access and legislative or regulatory options that would enable such access; and (iv) whether, and to what extent, individual Reserve Banks have independent legal authority to grant or deny access and what Board-level policies ensure consistent evaluation. Section 4(c) requests the creation of transparent application procedures with 90-day decision timelines for complete applications, to the extent existing law permits.

The Proposal addresses some, but not all, of the EO’s requests. It establishes transparent application standards through the Account Access Guidelines amendments. It proposes a 90-day indicative timeline for Tier 2 and Tier 3 Payment Account requests, which aligns with the EO’s Section 4(c) aspiration for 90-day decisions on complete applications. However, the Proposal does not expand legal eligibility for accounts. It does not address whether non-bank financial companies that are not depository institutions could access Reserve Bank accounts, as contemplated in the EO’s Section 4(b) “covered firms” definition. That question—whether the Federal Reserve has legal authority to extend access to non-bank financial companies, or whether legislation would be required—would presumably be addressed in the 120-day report requested by Section 4(b).

The EO’s Section 3 mandates are directed at the other federal financial regulators. They require a 90-day review of regulations impeding fintech innovation and 180-day action. These mandates complement the payment access question. Among other things, they may enable more institutions to obtain the charter types that would make them legally eligible for Reserve Bank accounts under existing law. For fintech firms that are not currently depository institutions, Section 3’s charter-streamlining provisions may be as significant as the Federal Reserve-focused provisions in Section 4.

IV. Practical Implications and Next Steps

For institutions that are already legally eligible for Reserve Bank accounts, the Proposal could be significant. This includes state-chartered special purpose depository institutions (such as Wyoming SPDIs), stablecoin issuers that have obtained depository institution charters, and other payments-focused entities that hold novel charter types and currently rely on correspondent banking relationships. For these institutions, the Proposal offers a faster, more predictable path to direct Federal Reserve payment services access than the existing Master Account review process. Several commenters on the RFI noted that Payment Accounts would reduce counterparty risk, decrease costs and fees tied to intermediaries, speed up settlement, and improve the competitive environment by “leveling the playing field for new entrants.” However, the Proposal does not help fintech firms that have not obtained a depository institution charter. For those firms, the more relevant development is the EO’s request that the Federal Reserve evaluate whether eligibility could be expanded to “non-bank financial companies.”

Stablecoin issuers and GENIUS Act entities: Commenters on the RFI showed particular interest in the Payment Account’s benefits for stablecoin and tokenization use cases. They argued that a Payment Account could enable reserve management, issuance, and redemption. It could also support stablecoin–dollar fungibility and interoperability and settlement between different stablecoins. However, these benefits are available only to stablecoin issuers that have obtained a depository institution charter. The GENIUS Act authorizes certain nonbank entities to hold reserves at Reserve Banks, but it does not explicitly make them eligible for master accounts. Whether the Payment Account provides a pathway for non-depository stablecoin issuers depends on how the Federal Reserve interprets the GENIUS Act’s reserve-holding authorization in relation to account eligibility under the Federal Reserve Act.

Assessment of current posture and charter pathway: Fintech firms should assess whether their current or planned charter type provides legal eligibility for a Reserve Bank account. Firms that are already depository institutions may benefit from the Proposal’s streamlined Payment Account process. Firms that are not depository institutions have two potential pathways: (1) pursuing a charter that would confer eligibility under existing law, potentially aided by the EO’s Section 3 regulatory streamlining directives; or (2) awaiting the outcome of the Federal Reserve’s 120-day report, which may address whether the Federal Reserve has authority to extend access to non-bank financial companies or recommend legislative changes.

Comment letter strategy: Stakeholders should consider submitting comments on the Proposal within the 60-day comment period. The Board has posed questions on several topics: the design of the Payment Account, whether the $1 billion maximum Closing Balance Limit is appropriate, illicit finance requirements for non-federally insured institutions, and whether changes to the current tiering framework are warranted.

EO-mandated regulatory reviews: The 90-day and 180-day clocks for federal financial regulators under Section 3 of the EO began running on May 19, 2026. This creates deadlines in mid-August and mid-November 2026. Stakeholders should monitor public-facing outputs from the FDIC, OCC, SEC, CFTC, NCUA, and CFPB in response to these mandates.

V. Final Thoughts

The EO and the Proposal each represent meaningful developments, but they address different aspects of the fintech payment access question. The Proposal is the culmination of a policy process that began with Governor Waller’s exploratory “skinny” master account remarks in October 2025 and continued through the  RFI. For institutions that are already legally eligible for Reserve Bank accounts—primarily Tier 2 and Tier 3 depository institutions that have waited years for decisions on Master Account applications, or been deterred from applying by the uncertainty and opacity of the current process—the 90-day indicative timeline and standardized terms provide a more predictable path to direct access. The EO, by contrast, is forward-looking. It requests the Federal Reserve to evaluate whether its legal authority extends to non-bank financial companies and, if not, what legislative or regulatory changes would be required. For most fintech firms—those that are not depository institutions—the EO’s 120-day report will be the more consequential development to watch.

At the same time, the Payment Account is, by design, a limited service. The exclusion of FedACH, the prohibition on correspondent/respondent relationships, and the Closing Balance Limit will constrain the business models the Payment Account can fully support. Institutions with more complex operational needs will still need to pursue a Master Account. This includes those seeking to participate in the ACH network or to provide settlement services for other institutions. The Master Account review process for Tier 2 and Tier 3 institutions remains longer and less certain—the Proposal does not set an indicative timeline for those reviews. Governor Michael Barr’s dissent also signals that the final rule may face pressure to include more robust AML/BSA requirements and oversight.