US Fed Proposes 'Skinny Accounts' for Fintech and Crypto Just One Day After Trump Executive Order

On May 20, 2026, the U.S. Federal Reserve (Fed) made a decisive move to modernize the national payment network by proposing a new 'Payment Account' framework designed for fintech and virtual asset-focused institutions. This action comes just 24 hours after President Donald J. Trump issued an executive order directing the integration of financial technology innovation into the federal regulatory framework.

This proposal is interpreted as a signal to resolve the long-standing deadlock surrounding non-bank institutions' access to central bank ledgers. Based on feedback gathered through public hearings, the Fed plans to establish a path for innovative financial institutions to safely access the Fed's payment system.

This special-purpose reserve bank account prototype, dubbed the 'Skinny Account,' has been tailored to the risks and needs of institutions focused on payment innovation. The Fed expects account holders to use these accounts solely for the explicit purpose of facilitating payments, rather than for traditional banking activities.

The payment account proposal reflects a sensitivity to the diversity of modern payment business models and represents a notable middle-ground evolution in the Fed's approach to account access.

This move is directly linked to President Trump's executive order announced on May 19, 2026. The order contains instructions for regulatory agencies to modernize payment infrastructure and integrate fintech innovation into existing systems to increase operational efficiency. This reflects the administration's commitment to restoring the integrity of the U.S. financial system and securing a technological advantage.

Suspension of Tier 3 Applications and Impact on the Virtual Asset Industry

The Federal Reserve has declared a temporary suspension of 'Tier 3' applications, which primarily include non-federally insured institutions or virtual asset companies, while the new framework is being finalized. This is interpreted as an attempt to find a strategic middle ground that fills regulatory gaps while embracing innovation. The Fed plans to use this period to further refine the screening criteria for high-risk applicants.

• Eligibility limited to legally qualified financial institutions
• Limited scope of operations excluding deposit-taking or lending activities
• Account usage purpose dedicated solely to payment-related activities
• Obligation to comply with the Fed's strict risk management and supervision standards

The traditional banking sector is expressing immediate concern over this proposal. Interest groups such as the American Bankers Association (ABA) are strongly demanding the creation of a level playing field, pointing out that fintech companies could compete for deposits without the same regulatory burden. In particular, they warn that the new account type could increase capital costs for existing banks and weaken their capacity for small business lending.

Concerns are also being raised that virtual asset companies could erode deposits at existing banks by attracting customers through various means, such as offering rewards. Consequently, the banking industry appears to be pressuring the Fed, arguing that regulatory gaps must be addressed through legislation. The Fed is now faced with the task of mediating these stakeholder conflicts while maintaining the stability of the overall system.

This proposal is an extension of the government's efforts to modernize payment infrastructure and prevent fraud that began in 2025. At that time, Executive Orders 14247 and 14249 focused on blocking 'off-the-books' wage payments intended to evade Bank Secrecy Act (BSA) reporting. The Fed's current payment account framework also aims to accommodate technological progress while maintaining this stance on enhancing transparency.

The upcoming public comment period is expected to be a critical watershed in determining the barriers to entry for the next generation of payment processors in the U.S. financial system. Depending on how the final framework balances innovation and stability, the landscape of the U.S. fintech industry is likely to change for years to come.