US Federal Reserve Briefly, the Fed introduced a new payment account model that will provide limited access to altcoin arm stablecoin issuers and cryptocurrency companies at the first Payment Innovation Conference held on October 21. suggested. Fed Governor Christopher Waller The draft announced by cryptocurrency companies fedwire And ACH While it offers a direct connection to the payment infrastructure, it excludes full master account privileges. Waller stated that the account will not provide interest overdraft or emergency borrowing opportunity and that the model will focus only on the payment function.
Return to the “Narrow Banking” Model
The new account type brought the narrow banking approach that only covers payments to the agenda, excluding credit creation. stablecoin issuers currently hold their reserves in backed assets but FedIt processes token redemptions through traditional banks as they do not have direct access to . Waller’s proposal would allow qualified firms to hold their reserves directly with the Fed and back their coins with central bank money.
CEO of Custodia Bank Caitlin Longsaid that the change in question “compensates for the mistake the Fed made by blocking payment-oriented banks.” The model promises efficiency and speed in repayments by reducing liquidity bottlenecks between banks and their partners.
However, the plan brings with it some risks. BitMEX founder Arthur Hayes“What if Tether was no longer dependent on a traditional bank? The Fed is moving towards destroying commercial banking.” He pointed out that the role of commercial banks in the system may weaken. It is stated that the Fed is trying to limit these risks with restrictions such as not paying interest, setting balance limits and removing credit facilities.
Liquidity, Competition and Regulatory Balance
Waller instructed Fed staff to gather feedback from stakeholders, without revealing the timeline for the regulation. entered into force in July GENIUS Actits altcoin arm had set federal standards for stablecoins but did not include Fed access. The new model eliminates this deficiency and offers a special gateway to payment.
cryptocurrencyEmphasizing that the infrastructure specific to Turkey is now at the center of the dollar flow, Waller stated that this transformation in the financial system will create permanent effects in terms of both regulation and liquidity.
