Major U.S. banking lobbies have formally requested the Federal Reserve impose a mandatory 12-month “safe and sound” operational waiting period before crypto firms can apply for the central bank’s proposed “skinny” master accounts. The demand, filed by the Bank Policy Institute (BPI) and The Clearing House (TCH) ahead of the Feb. 6 comment deadline, threatens to stall the implementation of the GENIUS Act’s vision for non-bank stablecoin issuance.
The "Safe and Sound" Blockade
In a joint comment letter, the banking associations argued that granting immediate access to newly licensed payment firms, specifically those empowered by the recently enacted GENIUS Act, introduces unacceptable illicit finance risks. They proposed a strict condition: any non-bank applicant must demonstrate a full year of compliant operations before even requesting a payment account.
This effectively extends the banking sector’s monopoly on the Fed’s payment rails through 2027. The Fed’s original proposal for "payment accounts", dubbed "skinny accounts" by Governor Christopher Waller, offered a compromise: direct access to Fedwire and settlement services, but with severe restrictions:
- Cap: Balances limited to the lesser of $500 million or 10% of total assets.
- No Yield: Zero interest paid on reserves.
- No Safety Net: No access to the discount window or overdraft privileges.
Waller: "Everyone is Yelling at Me"
Fed Governor Christopher Waller, speaking at the Global Interdependence Center summit in La Jolla on Monday, acknowledged the polarization. "Everyone is yelling at me, they just did it on Friday," Waller noted, referencing the flood of last-minute comments. He highlighted the fundamental disconnect:
"Crypto-focused institutions want more stuff… they want access to those payment rails. Then the banks are looking at this in a very different way. Most of their comments are on money laundering and illicit finance."
The Oligopoly Defense
Crypto issuers argue the banks’ safety concerns are a thinly veiled attempt to protect fee revenue. Circle, in its filing, contended that direct Fed access is critical to removing counterparty risk, a lesson learned from the 2023 banking crisis. The Blockchain Payments Consortium characterized the current bank-mediated model as an "uncompetitive practice" that concentrates systemic risk in a handful of “too-big-to-fail” intermediaries.
If the Fed bows to the BPI’s 12-month demand, stablecoin issuers will remain forced to hold reserves at commercial banks, subjecting them to the very balance sheet risks the GENIUS Act sought to circumvent.
