Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesEarnSquareMore
Fed's Proposal for Stablecoin Integration Ignites Discussion on Potential Bank Industry Upheaval

Fed's Proposal for Stablecoin Integration Ignites Discussion on Potential Bank Industry Upheaval

Bitget-RWA2025/10/26 00:20
By:Bitget-RWA

- Fed proposes "skinny" master account to grant stablecoin firms limited access to its payment rails, marking a shift from cautious digital asset stance. - Initiative aligns with GENIUS Act's requirements for stablecoin reserves while addressing gaps in direct Fed infrastructure access for non-banks. - Market data shows 70% surge in stablecoin payments post-GENIUS Act, with B2B transactions now dominating the sector. - Critics warn of systemic risks from operational failures and regulatory arbitrage, citin

The Federal Reserve has introduced a notable initiative to bring stablecoin issuers closer to the U.S. payments ecosystem by suggesting a "skinny" master account, which would provide restricted access to the Fed’s payment systems. Announced by Governor Christopher Waller during the central bank’s first Payments Innovation Conference, this move signals a departure from the Fed’s traditionally reserved approach to digital currencies. Through this account, stablecoin companies could conduct transactions directly on the Fed’s network, though they would not receive full banking benefits like interest-earning accounts or overdraft options,

.

Fed's Proposal for Stablecoin Integration Ignites Discussion on Potential Bank Industry Upheaval image 0

This proposal, which sets limits on account balances and blocks access to emergency loans, is intended to make stablecoin redemptions smoother while protecting the Fed’s financial position. By allowing direct settlements, the central bank aims to boost the speed and reliability of dollar-backed stablecoin transfers, especially during times of high activity. Companies such as Ripple and Custodia Bank could use this system to simplify international payments and reduce dependence on intermediary banks, as highlighted by CryptoSlate.

This development fits within the broader regulatory framework established by the Guiding and Establishing Innovation for U.S. Stablecoins Act (GENIUS Act), which became law in July 2025. The act requires stablecoins to be fully supported by U.S. dollars or highly liquid assets and mandates yearly audits for major issuers. While the legislation laid the groundwork for regulation, it did not provide stablecoin issuers with direct Fed access—a gap that Waller’s proposal now seeks to fill,

and in .

The effects of these changes are already visible in the market. Artemis, a blockchain analytics firm, observed a 70% increase in stablecoin payment volumes since the GENIUS Act was enacted, with $10 billion processed in August alone—up from $6 billion in February 2025. Business-to-business transactions now make up the majority, totaling $6.4 billion each month, as more companies turn to stablecoins to avoid delays in conventional cross-border banking;

also covered this trend.

Nonetheless, the Fed’s initiative has sparked controversy. Detractors, including Senator Elizabeth Warren (D-Mass.), contend that the GENIUS Act’s relatively hands-off regulatory approach could leave the financial system vulnerable to operational mishaps and regulatory loopholes. Warren pointed to a recent case where Paxos mistakenly created $30 trillion in stablecoins, cautioning that weak controls could threaten market stability. She called on the Treasury Department to clarify enforcement plans and to specify if further congressional action is necessary, as reported by Lookonchain and

.

At the same time, industry participants are adjusting to the shifting environment. Modern Treasury, a fintech company focused on blockchain-based payments, recently bought Beam, a startup specializing in stablecoin infrastructure, in an all-stock transaction valued at $40 million. This acquisition highlights the rising interest in programmable payment technologies as firms like Salesforce-backed Modern Treasury expand into stablecoin-powered offerings,

.

The Fed’s plan also brings up concerns about the potential marginalization of commercial banks. By letting stablecoin issuers connect directly to Fed payment systems, the central bank could diminish the traditional role of banks in stablecoin redemption processes. Arthur Hayes, BitMEX’s co-founder, warned that this could “destroy commercial banking in the U.S.,” though Fed representatives have stressed that limits on interest and overdrafts are meant to prevent the Fed from becoming a main deposit institution, as previously noted by CryptoSlate.

As the Federal Reserve gathers input from stakeholders on its proposal, both regulatory and market conditions for stablecoins continue to shift. With the GENIUS Act offering a legal base and the Fed opening up its infrastructure, the industry is set for further expansion—though ensuring a balance between innovation and systemic safety remains a key issue for regulators, according to the Invezz report and later Bloomberg coverage.

0

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

PoolX: Earn new token airdrops
Lock your assets and earn 10%+ APR
Lock now!

You may also like

Switzerland Delays Crypto Information Exchange Pending International Coordination

- Switzerland delays crypto tax data sharing with foreign nations until 2027, citing unresolved CARF partner agreements. - The OECD's 2022 framework requires member states to exchange crypto account details, but 75 countries including the EU and UK face implementation challenges. - Transitional measures ease compliance burdens for Swiss crypto firms while awaiting finalized international data-sharing protocols. - Major economies like the U.S., China, and Saudi Arabia remain outside CARF due to non-complian

Bitget-RWA2025/11/28 11:02
Switzerland Delays Crypto Information Exchange Pending International Coordination

Bitcoin Updates: SGX Addresses Offshore Perp Shortfall as Bitcoin Decline Increases Demand for Hedging

- SGX launched Bitcoin and Ethereum perpetual futures, becoming a first-mover in regulated onshore crypto derivatives to meet institutional demand. - The $187B/year perp market, dominated by Asia, now gains a regulated alternative to offshore platforms with SGX's 22.5-hour trading window. - Perps enable hedging during Bitcoin's 2025 downturn, with SGX's margin-call system prioritizing investor protection over instant liquidations. - Regulatory caution limits access to accredited investors, aligning with gl

Bitget-RWA2025/11/28 10:44
Bitcoin Updates: SGX Addresses Offshore Perp Shortfall as Bitcoin Decline Increases Demand for Hedging

Bitcoin News Update: Institutional ETF Adjustments Challenge Key Bitcoin Support Thresholds

- Analysts warn Bitcoin faces 25% drop risk if key support levels fail amid shifting institutional ETF dynamics. - Texas's $5M IBIT purchase highlights growing government interest, but ETFs fall short of direct BTC ownership criteria. - Technical analysis shows Bitcoin trapped in a broadening wedge pattern, with breakdown below $80,000 risking $53k decline. - Institutional rebalancing sees $66M IBIT outflows vs. $171M FBTC inflows, signaling tactical ETF rotation over accumulation. - Abu Dhabi's $238M ETF

Bitget-RWA2025/11/28 10:44
Bitcoin News Update: Institutional ETF Adjustments Challenge Key Bitcoin Support Thresholds

XRP News Today: IMF Cautions That Rapid Tokenized Markets Could Intensify Crashes in the Absence of Regulation

- IMF warned tokenized markets like XRP could worsen flash crashes without regulation, citing risks from decentralized systems lacking traditional safeguards. - Report acknowledged tokenization's potential to cut cross-border payment costs but highlighted volatility risks from rapid liquidity loss seen in crypto markets. - SEC's approval of crypto ETFs signals growing institutional acceptance, though regulators emphasize oversight frameworks to mitigate systemic risks. - IMF proposed a global digital marke

Bitget-RWA2025/11/28 10:44
XRP News Today: IMF Cautions That Rapid Tokenized Markets Could Intensify Crashes in the Absence of Regulation