Fed Reveals Guidelines for Crypto Banks Who Want to Open ‘Master Accounts’

cryptonews.com:

The Federal Reserve (Fed)'s governing board has unveiled guidelines that will standardize applications for “master accounts” from institutions “with novel charters,” including “cryptocurrency custody banks and their trade associations.”

Reserve bank master accounts let institutions gain direct access to the Fed’s payment systems. Without this access, firms must team up with partner banks who have master accounts. A number of United States-based crypto custody banks have been pushing for direct master bank access for several years – and appear keen to do away for the need for intermediary partnerships with conventional banks.

The new guidelines are not legally binding rules, but they do appear to provide clear room for maneuver for crypto players seeking master account access.

There was only one direct crypto reference in the entire document (the aforementioned reference to “cryptocurrency custody banks and their trade associations”). But there may be some reason for cheer among the United States crypto community, with the Fed making it clear that its board “does not believe that it is appropriate to categorically exclude all novel charters from access to accounts and services.”

However, gaining master account access is unlikely to be a simple process for crypto firms. The guidelines instruct reserve banks to “integrate to the extent possible” the “assessments of an institution by state and/or federal supervisors” to their own “independent assessment” of an applicant’s “risk profile.”

The Fed also claimed that the levels “of due diligence and scrutiny” would increase in the case of institutions “with novel charters,” which would “undergo a more extensive review” than tradfi firms under the new guidelines.

The Fed noted that