Insights on the Proposed “Skinny” Master Account
Stu Alderoty, Ripple’s Chief Legal Officer, recently shared insights with Reuters regarding a proposed concept from the Federal Reserve—a “skinny” master account. Alderoty indicated that this simplified account structure could be a beneficial option for Ripple, offering reassurance to traditional banks about its viability.
The Importance of Master Accounts
A master account from the Federal Reserve is essential for depository institutions, allowing them to process wholesale payments via Fed payment systems, including services like FedNow. Although the “skinny” account is a more constrained variant of the standard master account—lacking access to emergency funds and not accruing interest on deposits—it continues to draw interest among crypto firms.
Current Evaluation and Industry Response
Fed Governor Christopher Waller is currently evaluating the skinny account proposal, but immediate implementation appears unlikely as the Fed examines this idea further. Earlier this year, Ripple applied for a master account to facilitate rapid access to the reserves backing its RLUSD stablecoin. Other prominent crypto entities, such as Anchorage Digital Bank and Paxos Trust Company, have also sought similar arrangements with the Fed.
Concerns from the Banking Sector
Despite the potential for innovation, the banking sector has expressed significant concerns regarding financial stability and the competitive pressures these accounts could introduce, threatening their market share and fee revenue. Nonetheless, Waller believes that his proposed version of a master account could serve as a useful compromise between innovation in the financial sector and the concerns of traditional banks.
