Ripple’s Chief Legal Officer, Stuart Alderoty, has voiced strong support for the introduction of a “skinny” Federal Reserve (Fed) master account, positioning it as a practical resolution to growing concerns among traditional banks over financial stability and competition from emerging fintech and crypto firms. This leaner version of a master account would enable select non-bank entities, such as Ripple, to access core payment services of the central bank without receiving full banking privileges.
In a recent interview, Alderoty described the proposed account structure as both “appealing” and “balanced,” particularly for companies like Ripple that do not fall neatly into traditional banking categories but still require streamlined access to financial infrastructure. He argued that such an account could help allay the fears of established financial institutions by limiting the benefits granted to non-banks, thus minimizing competitive disruptions.
Ripple’s push for access to the Fed’s payment systems is not new. In July, the company formally applied for a full master account—an account that would permit it to interact directly with the Federal Reserve’s clearing and settlement systems, bypassing the need for intermediary banks. This would mark a significant milestone in Ripple’s long-standing mission to offer more efficient, blockchain-based financial services.
Historically, the Federal Reserve has been reluctant to extend master account access to non-regulated or lightly regulated entities, citing concerns over potential systemic risks. Banks have also lobbied against such moves, worried about the erosion of their central role in the financial ecosystem. Despite that, Fed Governor Christopher Waller recently introduced the idea of a limited-access or “skinny” master account, signaling a shift in regulatory thinking.
Under Waller’s proposal, this type of account would provide payment system access while excluding traditional benefits such as interest-bearing balances, overnight overdraft facilities, or emergency credit lines. The goal is to enable innovation without undermining the core functions of the banking sector.
For Ripple, this could be a game-changer. With direct access to Fed payment rails, the company could enhance the efficiency of its transactions, especially when it comes to issuing and redeeming RLUSD, its dollar-backed stablecoin. This would not only lower transaction costs but also improve settlement speeds by eliminating the dependency on third-party banks.
Alderoty highlighted that direct access would offer the “most transparent and efficient” mechanism for managing U.S. dollar reserves and Treasury holdings. He stressed the importance of redeemability and liquidity, particularly in the context of stablecoin operations, where trust and transparency are paramount.
However, the proposal is still theoretical. Waller noted that the “skinny” account concept is in its early stages and subject to regulatory development. He emphasized that any implementation would be narrowly tailored to avoid disrupting the traditional banking landscape. Moreover, only entities that meet strict legal eligibility criteria would qualify, a detail that has sparked debate within the crypto industry.
Caitlin Long, a seasoned Wall Street executive and the CEO of Custodia Bank—another crypto-focused firm that has long sought access to Fed infrastructure—responded to Waller’s comments with caution. While acknowledging the potential benefits, she warned that regulatory ambiguity and unclear eligibility requirements could limit the practical impact of such accounts.
Meanwhile, Ripple continues to navigate a volatile crypto market. At the time of publication, XRP, the firm’s native token, was trading at $2.22, reflecting a 6% drop over the past 24 hours and an 8% decrease over the week. These losses mirror the broader market downturn, suggesting that investor confidence remains fragile amid regulatory uncertainty and macroeconomic headwinds.
The emergence of “skinny” Fed accounts could signal a broader shift in how the U.S. financial system accommodates fintech and crypto innovators. If implemented, this model could serve as a bridge between traditional finance and decentralized technologies, fostering a more inclusive and agile financial infrastructure.
Beyond Ripple, other crypto firms are also eyeing the potential of direct Fed access. The ability to settle payments in real-time, manage reserves efficiently, and reduce reliance on banks could revolutionize how these companies operate. It could also unlock new use cases for stablecoins and digital asset payments in both institutional and retail markets.
Critics, however, remain concerned that even a limited Fed account structure could create a two-tiered system that favors large, well-connected crypto firms over smaller startups. There are also questions about how the Fed will ensure compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations if it begins dealing with non-bank entities more directly.
Moreover, the long-term implications for the banking sector could be profound. As fintech and crypto firms gain more autonomy and infrastructure access, traditional banks may feel pressure to innovate or risk losing relevance. This could accelerate digital transformation efforts across the financial industry, potentially reshaping the competitive landscape.
The debate over Fed account access also highlights the broader need for regulatory clarity in the crypto space. Without well-defined rules, both innovators and regulators face uncertainty that could stifle progress. The “skinny” account proposal may offer a middle ground—allowing innovation while maintaining guardrails—but its success will hinge on thoughtful implementation and transparent governance.
In the coming months, the Federal Reserve’s approach to this issue will be closely watched. For companies like Ripple, the outcome could determine not just operational efficiencies, but also their role in shaping the future of global finance. As the lines between traditional banking and decentralized finance continue to blur, solutions like the “skinny” Fed account may become a vital component of financial modernization.