Blockchain payments company Ripple has expressed support for the concept of a “skinny” Federal Reserve (Fed) payment account tailored to non-bank entities through its legal director, Stuart Alderoty. According to reports, this account could allay classic banks’ concerns about financial stability and competitive risks.

Ripple seeks Fed master account

In interview in collaboration with Reuters, Alderoty called the idea “attractive” and suggested it could reassure conventional banks that fear increased competition from lightly regulated non-banks.

Already in July this year, Ripple applied to open a Fed master account, which would allow the company to directly connect to the payment infrastructure of the US central bank, without the need to utilize intermediaries.

In the past, the Federal Reserve has been cautious about granting access to its resources payment systems less regulated entities, partly due to banks’ concerns about potential threats to the financial system.

However, in a notable policy shift, Fed Governor Christopher Waller recently indicated that the central bank was considering creating a “lean” master account.

This account would allow businesses to access Fed payment services without offering other key benefits such as interest payments, overdraft privileges or access to emergency loans.

Even with these restrictions, a lean account could still make it easier for Ripple to quickly convert reserves into a dollar-pegged stablecoin, RLUSD. Direct access to Fed services would streamline transactions and reduce the costs associated with using banking intermediaries.

Industry leaders are speaking out

Alderoty stressed the importance of convertibility, stating that access to a master account would provide the most competent and clear way to manage U.S. dollar treasury assets and bonds.

Waller explained that the concept remains a prototype and is subject to change. He noted that the purpose of such bills will be confined in order to avoid interference with the law activities of the classic banking sector.

He further mentioned that these “skinny” accounts could allow crypto institutions to access the Fed’s payment rails on a “streamlined schedule,” albeit without certain benefits such as interest on account balances or overdraft options.

But Wall Street veteran Caitlin Long, who is also the founder and CEO of Custodia, a Wyoming-based cryptocurrency bank that has long sought a full-fledged master account, expressed caution about the idea of ​​such concepts.

She emphasized that Waller’s announcement specified that the Federal Reserve’s recent program would apply only to “legally eligible entities,” underscoring the importance of detail in implementation.

At the time of writing, the company’s related cryptocurrency, XRP, was trading at $2.22, indicating significant losses in line with the current downturn in the broader cryptocurrency market. Over the last 24 hours and seven days, the altcoin has lost 6% and 8% in value, respectively.

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