Key Insights:
- Crypto banking access is now central to Trump’s Fed payment review.
- The order asks the Fed to report payment access options within 120 days.
- Kraken’s limited account approval intensified concerns in the banking industry.
U.S. President Donald Trump has pushed crypto banking access back into Washington’s payment debate after signing an executive order that asks the Federal Reserve to review whether fintech and crypto firms should connect directly to central bank payment services.
The May 19 order says regulators should remove rules that create unnecessary barriers for fintech firms while balancing safety, market integrity, and financial stability. It also asks the Fed to report within 120 days on direct access options for uninsured depository institutions and non-bank financial firms.
Crypto Banking Access Moves into Fed Policy Review
The order does not automatically grant crypto banking access to exchanges, stablecoin firms, or blockchain payment companies. Instead, it asks the Federal Reserve Board to assess its legal authority under federal law and identify options that could expand access where permitted.
The review covers Reserve Bank payment accounts and payment services. These accounts matter because they enable direct settlement through core U.S. payment systems, bypassing partner banks. For crypto firms, this could reduce settlement delays and strengthen dollar payment operations.
President Trump’s order also asks whether each of the 12 regional Federal Reserve Banks can independently approve or reject applications. That question has become central after recent disputes over how local Reserve Banks handle non-bank applicants. The directive also aligns crypto regulations more closely with broader payment modernization policy.
Fed Payment Access Raises Questions for Non-Bank Firms
The White House framed the order as part of a wider fintech policy shift. It directed federal financial regulators to review regulations, guidance, supervisory practices, and application processes within 90 days. Regulators must identify rules that may block partnerships between fintech firms and federally regulated institutions.
The order also asks agencies to consider changes that could streamline applications for bank charters, credit union charters, deposit insurance, registrations, and other approvals. However, it says regulators must weigh innovation against consumer protection, investor protection, financial stability, and oversight.
The Fed payment review may become the most closely watched part of the order. Direct access could help qualified firms process payments faster. Yet banks argue that non-bank firms should not receive central bank access without comparable supervision, capital standards, and compliance controls.
Crypto Banking Access Debate Grew After Kraken Approval
The debate sharpened in March when the Federal Reserve Bank of Kansas City approved a limited-purpose account for Payward Financial, doing business as Kraken Financial. The Kansas City Fed said Kraken Financial is a Wyoming-chartered Special Purpose Depository Institution. The Fed approved the account for an initial one-year term with tailored restrictions.
That approval gave Kraken a controlled route into the Federal Reserve payment system. It did not provide the full set of bank privileges. The Fed’s earlier proposal for limited “payment accounts” said such accounts would not pay interest, would not provide access to Fed credit, and would remain separate from traditional master accounts.
Banking groups criticized the move, arguing that uninsured crypto-linked institutions could create gaps in oversight. The concern now sits at the center of the broader debate over crypto regulations, especially as fintech firms seek clearer rules for direct settlement access.
Crypto advocates see the issue differently. They believe that access to crypto banking will decrease intermediary banks’ dependency and increase the resilience of regulated crypto asset companies. Supporters also say direct Fed payment connectivity could improve institutional transfers, stablecoin settlement, and payment competition.
Congress has also entered the discussion. The bipartisan Payments Access and Consumer Efficiency Act, introduced by Representatives Sam Liccardo and Young Kim in April, seeks to let qualified payment providers access federal payment systems directly. The proposal remains early, but it shows that the policy fight now extends beyond the Fed.
