The central bank will create a multi-tier system for the evaluation process, banks of Wyoming is most likely to come under the most scrutiny.

Fed publishes new guidelines for banks

According to the statement, the US Federal Reserve (Fed) will publish this afternoon detailed guidance on granting access to Federal Reserve accounts and payment services to banks that process and other organisations.

The announcement appears to bring the US central bank closer to allowing Wyoming special purpose depository institutions (SPDIs) such as Custodia (formerly Avanti) and Bank, access these accounts without going through an intermediary bank. This is considered an important link in the US and international financial system.

In the statement, Fed Vice President Lael Brainard said:

“The new guidelines provide a consistent and transparent process for evaluating applications for Federal Reserve accounts and access to payment services to promote a secure payment system, comprehensive and creative”.

The guidance is largely similar to what was first proposed in 2021 to create a multi-tier system that would allow the Fed to tailor its review process depending on the type of financial institution it is applying for.

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All seven members of the Federal Reserve Board voted in favor of the proposal. The new guidance says institutions without federal deposit insurance (FDIC) will face more scrutiny. As follows:

  • Tier 1 banks will be federally insured.
  • Tier 2 banks will not be federally insured but will still be subject to close scrutiny from the federal banking agency.
  • The third tier includes companies that are not federally insured and are not subject to the scrutiny of the federal banking agency, most likely to apply to banks by Wyoming.

The main account issue for fintech companies has been a subject of considerable controversy. Custodia and All signed up for primary account access in 2021, shortly before the Fed announced its initial proposal.

David Kinitsky, CEO of Kraken Bank, said at the time that the proposal was a positive step for his company. However, Custodia is suing the Fed for allegedly violating a one-year deadline for granting key account access.

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