Aside from setting up a Strategic Bitcoin Reserve, one of the Trump administration’s key priorities has been clearing the way for crypto firms to get access to bank accounts in the U.S. In just the last few weeks, banking regulators such as the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC), each of which were in the industry’s crosshairs because of alleged discrimination against them, have reversed course.
Specifically, the OCC and FDIC have independently updated guidance for banks to make it easier for them to service crypto clients by telling them to ignore reputational risks for prospective clients and letting them decide for themselves whether to handle digital assets.
But what about crypto firms that want to operate like banks themselves? Multiple crypto-friendly institutions, such as Kraken Bank and Custodia Bank, have been trying for years to get a Federal Reserve master account, which is basically a key into the Fed’s payment system. But none have gotten approval.
These entities have cried foul and discrimination — though the Federal Reserve refutes these claims. With the Trump administration laying out the red carpet for crypto firms over its first few months, it is fair to wonder if these firms are about to get this long-awaited access.
But taking this step is not as simple as it seems. For starters, the Federal Reserve is an independent entity that operates outside of the executive branch. This means that Trump may not have the power to simply tell it what to do with regard to these applications.
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Why Fed Master Accounts Are So Important
A Fed master account gives financial institutions access to the Fed’s payment systems without having to go through a different financial institution as an intermediary. Services available to Fed master account holders include obtaining fiat, wire transfers, check clearing, payments settlement, and federal reserve float, which is effectively an interest-free loan to reduce payment processing delays. Crypto banks and companies say that the accounts would make doing business simpler because it would allow them to manage their own payment flows, rather than having to work with a partner bank. As of Feb. 28, 2025, 8,842 financial institutions have Fed master account access.
Applying for a Fed master account is, theoretically, a simple process. First, the financial institution fills out a short application with their regional branch, which asks for things such as a routing number, address, and point of contact information. Applications are divided into Tiers 1-3, Tier 1 indicating that the institution requires minimal scrutiny and Tier 3 indicating an institution needs the most scrutiny. Both Custodia and Kraken Bank are treated as Tier 3 applicants.
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The Federal Reserve Board issued updated guidance on how reserve banks should scrutinize these applications in 2022. The guidance is not binding, and regional branches, which are technically private corporations but overseen by the board, theoretically have some independence in determining how to implement the guidance.
However, they rarely deviate, explained Esther George, who was President and CEO of the Kansas City Fed from 1982-2023. “There are very few incentives that would encourage a reserve bank to try to develop its own direction on things,” she explained in an interview. “So yes, it’s called guidance, but it is to reflect the fact that these judgments are being made at the local level, but always in the context of [knowing] what shows up in one district may show up in another.”
Does the Fed Treat Crypto Banks Fairly?
Crypto firms have claimed for the past several years that the Federal Reserve and its regional branches unfairly discriminated against them for holding crypto assets. Wyoming-based Custodia Bank, for example, sued the Fed in 2022 for taking too long to make a decision on whether to give it a master account and, later, for denying its application for a master account, later citing “fundamental concerns” about the soundness of the bank’s business model’s focus on crypto. Custodia claimed in the updated suit that the Fed board had directed the regional branch in charge of its application, the Kansas City Fed, to deny its application.
However, a federal judge ruled in favor of the Fed, saying that it had the discretion to decide whether to give a company master account access and that the evidence suggested that the Kansas City Fed had made that decision independently. Custodia appealed the decision, and the appeal is still under consideration.
“Relying on partner banks proved anything but durable for the crypto industry generally,” explained Caitlin Long, Founder and CEO of Custodia Bank. Debanking risk is one of multiple reasons it’s important for firms like hers to have access to Fed master accounts, she said. Other reasons include accessing Fedwire and ACH money transfers at wholesale cost rather than with additional fees, earning interest on reserves, and avoiding counterparty credit risk, she says. “Net-net, adding all of those factors up, Fed master accounts can be worth hundreds of millions of dollars (maybe billions) to the banks that hold them,” she explained.
Kraken Bank, which is a Wyoming-based subsidiary of the crypto exchange Kraken, has had similar issues with the Kansas City Fed. Shortly after Kraken Bank applied for a master account in 2020, a coalition of bank lobbying groups wrote a letter to the Fed warning the regulator that Kraken Bank, as a bank designed to serve crypto companies, presented additional risk to the federal banking system. Kraken’s application remains “pending.”
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Only one Tier 3 applicant has ever received a fed master account: Numisma, a regional bank located in Greenwich, Conn., that is not crypto related, and which has a co-founder who was vice chair of the Fed during the first Trump administration.
But despite appearances of special treatment, George asserts the process of approving master accounts is anything but. “You get into judgments around risk and what kinds of things you are trying to adhere to in fairness to the broader depository institutions that participate in that payment system,” George explained. “This is not discriminating in terms of preferences.”
Does the White House Have the Power to Direct the Fed?
Despite this history, the White House appears keen to get the Fed to change its policy. Three sources familiar with the Trump administration say that the White House was interested in talks with the Fed to have it issue master accounts to more crypto firms.
The nomination of Federal Reserve Governor Michelle Bowman to the role of vice chair for supervision could help with that. Bowman is a staunch Republican who has in recent years advocated for more transparency on the Fed supervision of banks serving crypto, despite a more cautious attitude after the crash of FTX.
Two additional sources indicated that the White House may try to address this issue via another Executive Order. However, even the White House is unsure whether an Executive Order instructing the Fed to change its policy would be legally enforceable, two sources said, due to the Fed’s legally supported independence from White House policy. It is the same separation that prevents the White House from dictating rate policy decisions at the Federal Reserve’s Open Market Committee’s (FOMC) eight meetings per year.
“The institutional design is intended to really be accountable to the Congress through the Federal Reserve Act, and to take its direction from the laws that apply to our financial system,” George explained.
A White House official told Unchained that the White House does not plan to issue an executive order “at this time.”
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Conflicting the picture is that one source noted that the White House is wary of further inflaming its relationship with the Fed over what the majority of American voters consider a niche issue. Trump has publicly feuded with Federal Reserve Chair Jerome Powell since Trump nominated him during his first term in office, most often over interest rates, which Trump believes Powell sets too high. This relationship could become even more tenuous and important given the negative market reaction to Trump’s controversial tariff policies.
On the All-In Podcast, Treasury Secretary Scott Bessent seemed to imply that he believed the executive had some influence over the Fed’s non-monetary policies, which include who it gives access to master accounts. “I 100% support the Fed’s autonomy on monetary policy,” he said. “On regulation, I think they have been much too harsh, especially on the smaller banks, medium banks…I plan to just keep pushing for safe, sound, smart deregulation.”
When Will the White House Act?
There were rumors that the White House was going to issue an Executive Order on this issue around the time of the inaugural crypto summit in early March regarding the suspension of Operation Choke Point 2.0, the industry’s term of choice for describing federal bank regulators’ alleged discrimination against crypto, but nothing came to pass. Instead, the industry just got guidance from the OCC and FDIC.
As of this writing, there are still rumors about said Executive Order, but there are no specific details for what it would mean in relation to master accounts at the Fed. Whether such an Executive Order would have any teeth without an act of Congress to back it up — or, as several other orders under Trump, such as that on prominent law firm Perkins Coie or voter ID laws, get tied up in the courts — is still an open question.
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“There are a number of executive orders that have been undertaken prior to this administration that ultimately have to find their way into how our system of government works, whether it’s coming out through the legislative branch, the executive branch, or judicial,” explained George. “But the Federal Reserve is here to do an important job, it is responsive, and it takes very seriously the economic and financial stability of our country. The American public depends on that.”
UPDATE: April 4, 5:52PM ET: This story was updated with a comment from the White House.
