A Federal Reserve (Fed) Governor has declared the start of a new chapter for the agency’s posture on crypto and shared their goal to actively participate in the “tech-driven revolution” of the payments system.
At the Payments Innovation Conference in Washington, DC, the Governor discussed how the Fed aims to embrace and actively participate in the “tech-driven revolution” of the payments system, led by the crypto and Decentralized Finance (DeFi) sectors.
In his opening remarks, Waller explained that the conference goal is to have a “vibrant discussion” on how the new technologies are entering the mainstream payment ecosystems, while addressing the Fed’s new approach toward DeFi and crypto.
I wanted to send a message that this is a new era for the Federal Reserve in payments—the defi industry is not viewed with suspicion or scorn. Rather, today, you are welcomed to the conversation on the future of payments in the United States and on our home field—something that would have been unimaginable a few years ago.
He explained that multiple technological advances are transforming the payment system, including stablecoins, tokenized assets, and artificial intelligence (AI), adding that the convergence of these innovations with the traditional financial ecosystem “is demanding change everywhere.”
“This is an acknowledgement that distributed ledgers and crypto-assets are no longer on the fringes but increasingly are woven into the fabric of the payment and financial systems,” he remarked.
The Federal Reserve Governor shared he had asked the agency’s staff to explore the creation of a “payment account” to “support those actively transforming the payment system.” As he explained, the payment account would be available to all institutions that are legally eligible and could be beneficial for those focused on payment innovations.
“This payment account concept would be targeted to provide basic Federal Reserve payment services to legally eligible institutions that right now conduct payment services primarily through a third-party bank that has a full-fledged master account,” he detailed.
“Payment innovation moves fast, and the Federal Reserve needs to keep up,” the Governor affirmed. He explained the prototype of the “skinny master account,” which would provide limited access to the Federal Reserve payment rails while controlling for various risks.
“I want to be clear that this is just a prototype idea to provide some clarity on how things could change. The upshot is that, in my view, the payments landscape, as well as the types of providers, has evolved dramatically in recent years, and, accordingly, a new payments account could better reflect this new reality.”
Ultimately, Governor Waller stated that the federal agency will engage with all interested stakeholders and crypto firms to discuss perspectives on the benefits and drawbacks of this approach.
