Fed Governor Shuns 'Payment Account' Plan, Cites Illicit-Finance Threat

Federal Reserve Board Gov. Michael Barr withheld support Friday for his agency's appeal for public input on offering unspecified, "eligible" financial institutions accounts they could use to clear and settle payments independently of other institutions.

In the six-page "request for information," the Federal Reserve Board drew a line between the proposed accounts, which the agency presumably would offer state-chartered banks and virtual asset service providers, from the master accounts traditional banks now use to process transactions for themselves and others, including VASPs.

"A payment account would not pay interest, not have access to Fed credit and would be subject to balance caps, among other features that separate it from a master account," the agency explained. "Additionally, a payment account would not expand or otherwise change legal eligibility for access to payments services from the Fed."

The distinction failed to convince Barr.

"While I support the concept of the Federal Reserve developing a payment-account prototype [for] legally eligible financial institutions, I cannot support this request," Barr said Friday. "It is not sufficiently specific about safeguards to protect against the accounts being used for money laundering and terrorist financing by institutions we do not supervise."

Financial services companies and other parties have 45 days to respond to the request, which the Federal Reserve Board published seven days after the Office of the Comptroller of the Currency conditionally granted federal charters to five VASPs.

• Topics: Anti-Money Laundering and Countering the Finance of Terrorism, Terrorism Financing, Fraud, Sanctions and Non-proliferation Finance
• Source: U.S.: Federal Reserve Board
• Document Date: December 19, 2025