Federal Reserve Proposes Limited Master Accounts for Crypto Firms – Compliance Implications for Fintechs
What Happened
In March 2026, the Kansas City Federal Reserve granted Kraken the first limited master account for a crypto bank, marking a significant shift in U.S. payment system access. Shortly after, the Federal Reserve Board proposed a revised framework for limited master accounts—often called 'skinny' accounts—for non-bank financial firms, including crypto companies. The proposal includes a 60-day comment period and builds on an earlier request for information. Under the framework, accounts would have no intraday credit, no discount window access, no interest on balances, and automated overdraft prevention. The Fed has also paused regional bank applications for such accounts pending final rulemaking.
President Trump issued an executive order titled 'Integrating Financial Technology Innovation into Regulatory Frameworks,' directing the Fed to review and potentially expand payment account access for fintechs and non-banks, removing overly burdensome policies. The order signals a policy shift toward separating payment access from full banking regulation, potentially allowing crypto firms to use Fedwire and FedNow, and eventually access master accounts with interest on reserves and discount window access.
Why It Matters for Compliance
Limited master accounts offer non-banks a direct connection to the U.S. payment system without the full regulatory burden of insured depository institutions. However, they come with significant compliance obligations. Firms holding such accounts must comply with the Bank Secrecy Act (BSA) and anti-money laundering (AML) requirements, including:
- Currency Transaction Reports (CTRs) for cash transactions over $10,000.
- Suspicious Activity Reports (SARs) filed with FinCEN within 30 days (60 days if no suspect identified) when transactions involve potential money laundering or BSA evasion.
- Customer Due Diligence (CDD) under the CDD Rule (effective May 2018), requiring identification of beneficial owners with 25%+ ownership or control.
- OFAC sanctions screening against the SDN List and other sanctions lists—strict liability applies.
The Fed's oversight will likely include examinations for compliance with these requirements, even though account holders are not fully regulated banks. State licensing (e.g., BitLicense in New York, or money transmitter licenses in other states) may still be required alongside the Fed account. The executive order also asks the Fed to examine the independence of regional Fed banks in granting accounts, which could lead to more uniform national standards.
What Organizations Should Do
Fintechs and crypto firms considering a limited master account should take the following steps:
- Assess BSA/AML readiness: Ensure your compliance program includes robust transaction monitoring, SAR filing procedures, and OFAC screening. Tools like RisksRadarAI can help reduce false positives by correlating signals across HR, finance, and security systems, and automate SAR generation in FinCEN format.
- Engage with legal counsel: Review the Fed's proposed framework and submit comments during the 60-day period. Understand the interplay between Fed oversight and state licensing.
- Prepare for examination: Develop policies for recordkeeping, reporting, and internal controls. The Fed may require proof of compliance before granting an account.
- Monitor regulatory developments: Track the Fed's final rule and any executive branch guidance. Use platforms like AIGovHub for multi-domain compliance tracking across fintech, AML, and data privacy regulations.
Firms like Ripple, Anchorage Digital, and Wise are reportedly considering pursuing Fed accounts. With bank lobby opposition expected, the final rule may impose additional safeguards. Early preparation will be key to navigating this evolving landscape.
This content is for informational purposes only and does not constitute legal advice.