The Federal Reserve faces a simultaneous governance crisis and structural conflict. The regulator has finished collecting feedback on implementing simplified master accounts for fintech companies.
Governor Christopher Waller calls the initiative necessary to support innovation, yet it has sparked fierce resistance from the traditional financial sector.
Banks Demand Closing the Door to Fintech
The proposed accounts offer fintechs limited access to the Fed’s payment system: no interest, no lending, and a strict balance limit — $500 M or 10% of assets.
In a letter to the regulator, stablecoin issuer Circle stated that direct access to settlements would strengthen the US payment system and fulfill Congress’s vision. The Blockchain Payments Consortium backed the stance: the current model concentrates risks around a few banks and kills competition.
The banking lobby has launched a counterattack. Better Markets called the proposal an “irresponsible handout to the crypto industry,” demanding the initiative be scrapped immediately.
The American Bankers Association (ABA) insists applicants lack proper oversight and security standards, putting the entire financial system at risk. The Wisconsin Bankers Association demands vetting not just legal status but actual risk management capabilities.
DOJ Investigation Blocks Leadership Transition
Paralysis in the Fed’s leadership sets the backdrop for these structural disputes. Treasury Secretary Scott Bessent took to Fox News to urge the Senate to immediately start hearings on Kevin Warsh, whom Donald Trump nominated for the central bank chief post on January 30.
Trump’s fellow Republican, Senator Thom Tillis, is blocking the process. He refuses to vote for Warsh until the DOJ concludes its investigation into current Chair Jerome Powell.
Attorney General Jeanine Pirro initiated a probe into Powell in early January, accusing him of embezzlement linked to Fed office renovations. Powell believes the case is revenge for his refusal to lower rates demanded by the White House.
Tillis vowed not to support the handover until the truth is established. Republicans hold a shaky majority in the Banking Committee (13 to 11). The stance of a single senator effectively hands control to Democrats and freezes Warsh’s appointment indefinitely.
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