Fed Seeks Comment on Limited Payment Accounts to Speed Settlement

The Federal Reserve has opened a 45-day public comment period on a proposal to create a limited-purpose “payment account” giving eligible financial institutions restricted access to Fed payment systems solely for clearing and settlement. These accounts would not be full master accounts and would exclude interest, discount-window access, daylight overdrafts, intraday credit and broader balance-management functions. Proposed safeguards include automated controls to prevent overdrafts and an overnight balance cap equal to the lower of $500 million or 10% of the institution’s total assets. The proposal targets modernization of U.S. payment infrastructure — including Fedwire Funds, the National Settlement Service, FedNow and limited Fedwire Securities transfers — to reduce settlement friction amid rising demand for faster settlement. The Fed framed the measure as a cautious, exploratory step that does not expand eligibility to nonbanks and does not address digital assets or a CBDC. Staff requested detailed feedback on account design, risk controls, compliance and financial integrity. For crypto traders, the plan could ease settlement frictions for regulated firms that interact with fiat rails, potentially improving on‑ramps and operational efficiency for compliant crypto services, while the explicit exclusion of nonbank eligibility and CBDC changes means limited immediate direct effects on crypto token markets.