Fintech And Crypto Firms Stew And Sue As Fed Moves Into 21st Century–Without Them

The launch of the Fed’s instant payment FedNow system has raised the value of access to master accounts–which Kraken Bank, Custodia Bank and others haven’t been granted.

_{By Emily Mason, Forbes Staff}

In July, the Federal Reserve launched FedNow, its first new payments system in 50 years. This promising new platform could eventually give businesses and consumers near instant access to payments (including paychecks) and money moved between financial accounts, while spurring innovation in the sector.

But there’s a catch: to get direct access to FedNow and other Fed services (including FedWire, for same day money transfers), an institution has to be approved for a “master account” by one of the 12 regional Federal Reserve Banks. Yet as fintech, crypto and other novel financial startups have gotten state banking charters and sought approval for these master accounts, they’ve encountered delays and outright rejection, leading to regulatory and political jousting–and inevitably, litigation. The long anticipated debut of FedNow, with all its potential, raises the stakes in this battle.