Federal Reserve and Crypto: Recent Developments

Last week marked some gradual yet significant advancements.

The Federal Reserve released its updated proposal for a «skinny» master account, revising the original proposal issued in December. Additionally, President Donald Trump authorized an executive order aimed at enhancing the integration of digital assets with current payment infrastructures.

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Skinny charter

The narrative

On Tuesday, U.S. President Donald Trump enacted two executive orders. One mandated that the government revise existing regulations to better incorporate cryptocurrency into payment systems, while the other tasked the Treasury Department and regulators with reinforcing Bank Secrecy Act regulations. The following day, the Federal Reserve Board unveiled its revised proposal for a skinny master account, detailing its strategy for allowing crypto firms access to its payment systems.

Why it matters

The integration of the crypto sector with the broader federal payments framework is undoubtedly a key objective for the industry. The proposals from last week could bring that goal closer to fruition.

Breaking it down

The Federal Reserve’s Wednesday proposal updates its skinny master account request for information first released in December 2025, outlining how the central bank plans to grant fintech and crypto companies access to its payment systems without necessitating that they become fully chartered banks under the Office of the Comptroller of the Currency.

The fintech-focused executive order instructed federal regulators to reassess their existing policies to determine how they govern financial institutions and pinpoint regulations that may hinder fintech firms from collaborating with regulated entities.

Additionally, the order asked the Fed to evaluate its approach to uninsured depository institutions and their access to payment accounts.

Part of this evaluation involves Federal Reserve member banks assessing if they can independently provide payment accounts to entities.

The Fed may not be able to accomplish all of this independently; Congressional action could be required to clarify what types of entities qualify for an account.

The BSA-focused executive order instructs the U.S. Treasury Department and regulators to provide guidance to banks and other entities.

«My Administration will not tolerate national security and public safety risks caused by illicit cross-border financial activity, nor will it permit risks to our financial system posed by the extension of credit or financial services to the inadmissible and removable alien population,» Trump’s order stated.

This includes an advisory that highlights «payroll tax evasion,» shell companies, and «the strategic use of unregistered money services businesses, third-party payment processors, or peer-to-peer platforms to facilitate ‘off-the-books’ wage payments intended to evade Bank Secrecy Act reporting thresholds or tax responsibilities,» among other types of entities.

Although the order did not specifically mention cryptocurrency or decentralized finance trading platforms, they could potentially be affected by any eventual guidance, according to Nicholas Anthony, a research fellow at the Cato Institute.

The next question is what might be included in the guidance and advisory.

«Currently, it is in the hands of the Treasury, which can apply it as it sees fit, to whoever it deems appropriate, due to the broader authority that the Treasury holds under the Bank Secrecy Act,» he explained.

Senate shenanigans

The Senate Banking Committee advanced the Clarity Act just over a week ago.

The expectation was that the full Senate might address this in the coming month, to resolve ethics and other outstanding matters before voting on whether to pass the bill to the House of Representatives. However, this timeline took a hit on Thursday when the Senate adjourned for the Memorial Day recess without voting on a reconciliation bill to fund the Department of Homeland Security, among other issues.

The challenge lies in the limited time available to accomplish tasks on the Senate floor. There are 19 working days in June and 15 in July, followed by five in August before everyone departs for the remainder of the summer.

During this period, the Senate needs to tackle reconciliation, a renewal of the Foreign Intelligence Surveillance Act (set to expire in mid-June), and potentially a housing bill.

Complicating matters is the reason for the Senate’s adjournment. President Donald Trump’s administration sought $1 billion for his proposed East Wing ballroom and more recently another $1.8 billion for a weaponization fund, which members from both parties have labeled as a «slush fund.» The Senate had already removed the ballroom funding from the bill, but the additional $1.8 billion seemed too challenging to negotiate this week.

Negotiations over these matters—if no backroom deals occur during the recess—could prolong the process, further constraining floor time for the Clarity Act. Additionally, there remains the ethics provision itself in the market structure bill. The White House has not yet indicated what it might accept, adding another layer of negotiation to monitor.

This week

This week

— The House and Senate are on recess this week.

If you have thoughts or questions about what I should cover next week or any other feedback you’d like to share, feel free to email me at nik@decryptnews.com or find me on Bluesky @nikhileshde.bsky.social.

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See you all next week!