U.S. Federal Reserve Governor Christopher Waller inaugurated the central bank’s inaugural payments-innovation conference by committing to embrace the innovations of the crypto sector, indicating that he has directed staff to examine a simplified version of the “master accounts” that enable financial institutions to access U.S. payment systems.
“My perspective from the Fed moving forward is to welcome disruption, not shy away from it,” Waller stated while opening the Tuesday event. “The Fed aims to be an integral part of this transformation.”
As one of the governors on the seven-member Fed board, Waller is reportedly among President Donald Trump’s leading candidates to succeed Fed Chair Jerome Powell when Powell’s term concludes next year. He proposed Tuesday’s payment conference to bring together the new crypto innovators with traditional payments infrastructure leaders.
“I believe we can and should enhance our support for those actively transforming the payment system,” he stated. “In that regard, I have asked Federal Reserve personnel to investigate the concept of what I term a payment account.”
This concept is envisioned as a “slim” version of the complete master accounts, providing new entrants a mechanism to bypass the need for third-party partnerships with institutions holding the full accounts. He suggested these streamlined payment accounts “would grant access to the Federal Reserve payment rails while managing various risks for the Federal Reserve and the payment system to control the account sizes and their impacts on the Fed’s balance sheet.”
For example, these accounts may not pay interest on balances, allow daylight overdraft privileges, or enable borrowing through the Fed’s so-called “discount window,” and they may be subject to balance limitations. Waller mentioned that the Fed would solicit feedback on this proposal, and the industry will hear “more about this shortly.”
Waller does not hold the vice chair for supervision role, thus he cannot immediately dictate Fed policy changes. The current vice chair is Michelle Bowman, and the board is led by Chair Powell, who was appointed by Trump but quickly fell out of favor with the president during Trump’s initial term. Nonetheless, Waller has established himself as a noteworthy advocate for crypto at the Fed, recently appearing at DC Fintech Week to commend innovations in decentralized finance (DeFi).
During that same event, Ripple CEO Brad Garlinghouse criticized Wall Street bankers’ reluctance to grant crypto firms access to Fed master accounts, which his company is among those pursuing. Such accounts facilitate more seamless integration into the U.S. financial ecosystem and direct access to the central bank’s payment systems, rather than compelling crypto-native firms to depend on external banking relationships.
“I wanted to convey that this marks a new章 for the Federal Reserve in payments,” Waller remarked on Tuesday. “The DeFi sector is not regarded with skepticism or disdain.” He termed the newly established Fed conference as “a recognition that distributed ledgers and crypto assets are no longer peripheral but are increasingly integrated into the payment and financial system.”
Read More: Crypto Is ‘Nothing to Be Afraid of’ Says Fed Governor Chris Waller
