America doesn’t need a second-class payments system

Soon you will pull out your phone, tap to pay with a credit card, a peer-to-peer app, or your bank app, and there is a good chance you will use a stablecoin without ever knowing it. Your experience will not change. But the plumbing behind it will, for the better.

That shift is already underway. Stablecoins have grown from about $250 billion in circulation last July to more than $310 billion today, a nearly 25% increase in volume. Congress saw it coming, which is why lawmakers and U.S. President Donald Trump enacted the GENIUS Act last year, putting federal regulation around the future of the dollar so it can move safely around the world through U.S. institutions with real BSA, AML, and sanctions programs. That is how you keep the dollar dominant and put it within reach of more people.

As Head of Global Operations at Anchorage Digital, I often think about this forthcoming change through two different experiences but ultimately come to the same conclusion. Anchorage Digital is home to America’s first federally chartered digital asset bank and the first federal stablecoin issuer. And as a former national bank examiner at the OCC with about a decade of experience supervising America’s traditional banks I’ve learned the same lesson: a wider federal regulatory perimeter makes America stronger.

Anchorage Digital Bank, N.A. is proof of that lesson. Yet despite having helped widen that perimeter by pioneering federally-regulated crypto banking that complies with our country’s laws, nationally-chartered banks like ours are also boxed out of it, unable to access the Federal Reserve’s payment rails directly, because of the way master account access has been administered, not by real legal limitations. Therefore we rely on partner banks to touch dollars we already are authorized to move. Frameworks that require a federally regulated bank to use another bank just to move certain funds adds unnecessary risk and inefficiency to our financial system.

This broken system has burned us once before. Anchorage Digital Bank was debanked in 2023 by a bank partner of two years, on 30 days’ notice. We didn't know if we were going to make payroll. Clients couldn’t wire funds into their accounts. In short, debanking almost wrecked us.

Thankfully, Washington has taken notice. The Federal Reserve is drafting a new rule to widen access to its payment rails, Congress is weighing legislation to do the same, and the White House has ordered a full review of Federal Reserve’s policy around access to its payment rails. That attention is welcome. The details matter.

The Federal Reserve’s proposed “skinny” payment account unfortunately stops far short of solving the problem. It would cap reserves, pay no interest, provide no intraday credit, and bar access to Fedwire Securities and FedACH, the network that clears roughly half of all U.S. payments. Without those pieces, a bank like us must still rely on another bank every night, reintroducing the very risk the skinny payment account was meant to remove. The skinny account sounds good in theory, but in practice it is layered on the same old dependency. We need to reopen the doors into the system. America should not build a second-class payments system for federally regulated trust banks.

There is a real debate about whether unregulated fintechs should access Fed payment rails. Our view is straightforward: get prudentially regulated, then get full access. But that is a separate question from whether a federally chartered, OCC-supervised national trust bank, held to the same standards as any other national bank and subject to the same time-tested OCC receivership process if it ever fails, should receive the same Fed services as every other member bank enjoys. Conflating the two shortchanges both arguments.

The Federal Reserve payment system is a walled garden, and rightly so; there are serious risks to opening access to unregulated or underregulated entities. But the walls should be drawn around prudent regulation, not arbitrary criteria. Fed membership should automatically mean access to Fed payment rails. Otherwise, if you build the walls in the wrong place, innovation will go offshore into foreign jurisdictions, beyond the reach of any U.S. regulator.

FDIC insurance is one of those arbitrary lines. Some point to its absence as a reason to hesitate, but that confuses two different risks. FDIC insurance protects against the risk created when a bank lends out client deposits, a risk inapplicable to a fully reserved custodial bank like Anchorage Digital Bank. Even stablecoin issuance, which more national trust banks are doing, is effectively full-reserve banking. Every stablecoin is always backed 100% by reserves, there is no fractional reserve banking being done, no asset-liability mismatch, and the risk to capital is fundamentally different. Federal Reserve Payment rail access should reflect actual risk, not assumptions carried over from a different banking model. Those differences should be reflected in how payment access is evaluated.

What is missing is not more studies to summarize longstanding banking law, but a published, uniform standard, applied the same way across the Federal Reserve’s system, so that similarly regulated banks get full access to Federal Reserve master accounts. Without them, institutions that took the harder path of federal oversight may still find themselves locked out of the very system they were regulated to join.

Federal oversight should be matched by federal infrastructure. If an institution qualifies to participate in America’s banking system, it should have a clear path to America’s payment system.