Ripple Backs “Skinny” Fed Accounts for Non-Banks

In a potential shift for U.S. financial infrastructure, crypto giant Ripple has voiced support for a “skinny” Federal Reserve master account designed for non-bank entities. The move could reshape the way digital payments and stablecoin transactions operate, offering speed and efficiency while addressing traditional banks’ concerns.

Ripple’s chief legal officer, Stu Alderoty, described the idea as “attractive” for both non-banks and traditional banks, suggesting it could balance innovation with financial stability. Unlike a full Fed account, a “skinny” version would limit access to certain services such as interest earnings, overdrafts, and emergency lending, but still enable rapid movement of funds.

This development is closely linked to Ripple’s application for a Fed master account, which would allow it to connect directly to the U.S. central bank’s payment infrastructure. Currently, Ripple relies on intermediaries, which slows down transactions and adds costs. Direct access could let the company instantly redeem reserves for its dollar-pegged stablecoin, RLUSD, improving transparency and efficiency.

The Federal Reserve has historically been cautious about granting lightly regulated non-banks access to its systems, citing potential risks to the financial system. Banks, too, have opposed the idea, fearing competition and systemic vulnerabilities. Fed Governor Christopher Waller has indicated that the “skinny” master account is in a prototype phase, designed for a limited set of functions without infringing on traditional banks’ operations.

If implemented, this model could set a precedent for how non-bank firms engage with central bank infrastructure, marking a significant step for digital currency adoption and faster payment settlements in the U.S. financial ecosystem.