Stablecoins Get a Fed Pass, But Banks May Lose Out

The Federal Reserve is opening a new door for stablecoin companies. On October 21, Governor Christopher Waller proposed a special payment account. This account lets stablecoin issuers and crypto firms access Fed payment systems. But it doesn't give them full access like regular banks. This is a big change. The Fed has been careful about working with crypto firms. Now, they are more open. Waller called this a "skinny" account. It gives basic access to Fedwire and ACH systems. But it doesn't offer interest payments, overdrafts, or emergency loans. This new account could change how stablecoins work. Stablecoin issuers usually partner with banks to handle dollar transactions. Now, they might do this directly with the Fed. This could make things faster and more efficient. But there are limits. The account has balance caps and no interest. Big stablecoin issuers like Tether hold billions in reserves. Strict caps might not cover all their needs. They may have to split their reserves between the Fed and commercial banks. Some people worry about the impact on banks. Arthur Hayes, co-founder of BitMEX, thinks this could hurt traditional banks. If big issuers and payment processors use Fed rails directly, they might not need banks as much. This could erode bank deposit bases and concentrate liquidity at the Fed. The Fed wants to support payments innovation. But they don't want to take on too much risk. The restrictions aim to balance these goals. Waller asked for stakeholder feedback but didn't set a timeline. This move comes after the GENIUS Act was signed in July 2025. The act set federal stablecoin requirements but didn't grant direct Fed access. Waller's proposal fills that gap. Firms with pending applications might see faster decisions. This policy shift integrates crypto into the payments system. It reduces fragility and recognizes that digital assets are now central to how dollars move. But it also creates a level playing field while disintermediating some bank services.