Trump Orders Review of Fed Master Account Rules for Crypto Companies

President Donald Trump signed an executive order calling for a comprehensive review of the Federal Reserve’s master account access rules, a decision likely to fundamentally transform how cryptocurrency companies access the U.S. banking system. The executive order, issued on January 23, 2025, as part of the administration’s broader strategy supporting digital assets, explicitly targets the regulatory obstacles that have prevented numerous crypto firms from obtaining a direct bank account with the Fed. This measure follows a series of executive actions aimed at making the United States « the world capital of cryptocurrency, » using the same phrasing the president employed during his electoral campaign. The decree marks a radical shift from the previous administration’s approach, which had sought to limit the expansion of cryptocurrencies and protect the traditional banking system.

Background

Since August 2022, the Federal Reserve has maintained strict guidelines for master account access, the system that allows financial institutions to directly access the central bank’s payment infrastructure. These guidelines were developed in response to an unprecedented surge in requests from cryptocurrency companies and fintech firms seeking this status, which was formerly reserved for traditional banks. The regulatory framework established by the Fed distinguishes three tiers of institutions based on their risk profile, with graduated due diligence requirements depending on the nature and supervision of each entity.

Master accounts provide direct access to the Fedwire payment system and other Federal Reserve payment services, a privilege reserved for institutions meeting rigorous criteria of security, regulatory compliance, and financial soundness. For crypto companies, this access represents the ability to function as recognized financial intermediaries, with correspondent banking relationships at the most fundamental level of the American financial system. Without a master account, these companies must go through traditional banking intermediaries, which increases their operational costs, limits their ability to offer competitive financial services, and exposes them to additional counterparty risks.

Several companies have attempted to obtain this status since 2020, but the Fed has maintained a cautious and methodical approach, raising concerns related to money laundering risks, the inherent volatility of digital assets, and the lack of a regulatory framework adapted to the sector’s specifics. Custodia Bank, a special purpose depository bank in Wyoming specializing in cryptocurrency services, even filed lawsuits against the Fed for indefinitely delaying a decision on its master account application submitted in October 2020. This case highlighted the persistent tensions between the crypto sector’s ambitions and the institutional caution of the American central bank.

Meanwhile, Kraken successfully obtained a master account, marking an important precedent for the industry and demonstrating that direct Fed access was not entirely out of reach for companies in the sector, even if this success remained the exception rather than the rule. The 2022 guidelines established a three-tier system differentiating institutions according to their risk profile and regulatory framework, with cryptocurrency companies generally classified in the strictest category — uninsured institutions not subject to direct federal prudential supervision. This classification has constituted a major obstacle for numerous companies seeking access to the central bank’s payment infrastructure.

The Facts

The January 2025 executive order, titled « Strengthening American Leadership in Digital Financial Technology, » establishes the President’s Working Group on Digital Asset Markets, chaired by the Special Advisor for AI and Crypto. This group is tasked with developing a comprehensive federal regulatory framework for digital assets, including stablecoins, and evaluating the creation of a strategic national digital asset stockpile. The text also confirms that federal agencies must endeavor to ensure « fair and open access to banking services for all law-abiding individual citizens and private-sector entities. »

This phrasing directly targets the systemic difficulties encountered by crypto companies in obtaining traditional banking services in the United States over recent years. Numerous companies have reported that traditional banks refused to work with them due to concerns about reputational or regulatory risks, creating a vicious cycle that limited their ability to grow and serve their customers effectively. Some companies were even forced to relocate to more welcoming jurisdictions like Wyoming, which developed a specific regulatory framework for digital assets, or to European countries where regulations are more favorable to innovation in this domain.

The order does not immediately remove existing restrictions, but calls for a thorough examination of regulatory obstacles and a revision of the 2022 master account guidelines. The administration states it wants to « make the United States the world capital of cryptocurrency, » an objective Mr. Trump promised during his electoral campaign specifically targeting Bitcoin operators and blockchain enthusiasts. This promise fits within a broader strategy to reclaim American technological leadership in the financial domain, competing directly with jurisdictions like Singapore, Switzerland, or the Cayman Islands that have attracted numerous companies in the sector.

Simultaneously, the decree formally prohibits any government agency from establishing, promoting, or issuing a central bank digital currency (CBDC) within U.S. jurisdiction or abroad, reversing the pursued under the Biden administration. This prohibition is presented as a measure to protect individual liberties and financial system stability, with the White House believing that CBDCs threaten citizens’ privacy and America’s financial sovereignty. The American position thus aligns with that of other countries that have expressed reservations about CBDCs, such as Russia or China, although for sometimes different reasons.

The Working Group must submit an initial report within 30 days of the order’s publication, with more detailed recommendations due in 60 days. This tight timeline demonstrates the urgency the administration places on this matter and its willingness to act quickly to transform the sector’s regulatory environment before the next electoral deadlines. Initial Congressional reactions suggest some legislators remain cautious about the scope of these measures and their potential implications for financial stability.

Analysis

The decision to specifically target Fed master account rules represents a significant escalation in the Trump administration’s crypto strategy. According to experts at the Harvard Kennedy School, this measure aims not only to liberalize banking access for crypto companies, but constitutes a broader attempt to limit the Federal Reserve’s independence in the realm of digital monetary policy. The real objective extends beyond simple banking accessibility to encompass a complete redefinition of the Fed’s role in the digital financial ecosystem and a repositioning of regulatory power in favor of the executive branch.

« Among the many executive orders signed by President Donald Trump in recent days, one promises to bring about a revolution in an area we did not expect the new president to be interested in: the payments system, » noted Ignazio Angeloni, professor at the European University Institute in Florence and Senior Policy Fellow at the Leibniz Institute for Financial Research SAFE. « It is worth understanding its content, as it is also relevant to us. First and foremost, the order delivers the final blow to the so-called central bank digital currency (CBDC), also known as digital cash; its creation and circulation are now banned in the United States. » The scholar’s analysis underscores the historic scope of this decision, which disrupts the traditional balance of powers in American financial regulation.

The Fed has found itself increasingly isolated in presidential working groups on digital finance. Unlike established practices since Reagan, where the Fed was systematically included in federal financial working groups created to address financial stability issues, the January 2025 executive order does not mention the Fed as part of the President’s Working Group on Digital Asset Markets. This absence is « unprecedented, » according to analysts, and raises fundamental questions about the balance of powers in regulating the American financial sector. The central bank, which has traditionally played a central role in financial system stability, finds itself marginalized on an issue that nonetheless directly concerns its core mission.

The implications of this decision are multiple and complex. On one hand, crypto companies that encountered systemic difficulties accessing banking services could benefit from a more favorable and predictable framework, stimulating innovation and employment in the American technology sector. On the other hand, critics worry about the potential risks of deregulation in a sector already prone to abuse and fraud, with potentially serious consequences for retail investors and overall financial stability. Consumer protection and financial stability remain major issues the administration will need to address in the coming months.

The question of Fed independence is also central to the debate. By excluding the central bank from the working group and ordering a review of master account rules, the administration sends a strong signal about its willingness to exert considerable pressure on the monetary institution. This approach raises constitutional questions about the separation of powers and the Fed’s traditionally autonomous role in the American system — an independence that has contributed to the dollar’s credibility and the stability of the global financial system over past decades.

Market Reactions

The announcement of the executive order triggered significant positive reactions in cryptocurrency markets. Bitcoin recorded substantial gains in the days following the decree’s publication, with investors anticipating a more favorable regulatory environment under the new administration and a possible resolution of uncertainties that had weighed on the sector for several years. Trading volumes increased sharply, reflecting a renewed interest from institutional investors in digital assets.

Several publicly traded crypto companies saw their values surge, with sector operators interpreting this decision as a strong signal of executive support for the industry. Stablecoins in particular benefited from renewed attention, with the administration confirming explicit support for the development of U.S. dollar-backed stablecoins globally. This position represents a major shift from the previous administration’s cautious approach, which viewed stablecoins as a potential risk to financial stability.

TD Cowen, the American investment bank, estimated that numerous additional crypto companies would likely obtain master accounts in the coming months if the revised guidelines effectively allow broader access for uninsured institutions subject to prudential supervision. This outlook fueled investor and sector participant optimism regarding the future evolution of the regulatory environment, with potentially positive implications for sector valuations.

Reactions from traditional banking sector participants are more reserved. Some major American banks have expressed concerns about the potential risks associated with easing rules for crypto companies, fearing risk contamination in the traditional banking system. The Federal Deposit Insurance Corporation (FDIC) has also adopted a cautious position, emphasizing the need to maintain high standards of security and compliance in the banking sector to protect depositors and financial stability.

Perspectives

The coming months will be decisive in measuring the real impact of this decision. The President’s Working Group must deliver its initial recommendations within 30 days, with a more thorough review planned in 60 days. The Fed, for its part, will likely need to adapt its 2022 guidelines to reflect the administration’s new priorities, which could take several additional months of negotiation and revision. The precise timeline for these adaptations will largely depend on the central bank’s willingness to cooperate with executive guidance or maintain its traditional posture of regulatory caution.

For investors and sector participants, this decision represents both an unprecedented opportunity and a significant risk. The opportunity lies in the possibility of broader access to banking services and a more predictable regulatory framework, which could accelerate cryptocurrency adoption and the development of innovative financial products. The risk concerns the potential consequences of deregulation in a still immature and structurally volatile sector, with possibilities of significant losses for retail investors who might be tempted to enter the market without fully understanding the associated risks.

Observers also emphasize the importance of monitoring the Fed’s evolving position facing this new regulatory landscape. The central bank has generally been cautious regarding digital assets, and its degree of autonomy on this matter remains a major issue for the future of the American financial system. How the Fed responds to requests to revise its master account guidelines will constitute a key indicator of the future balance between innovation and regulation in the crypto sector, ultimately arbitrating between executive ambitions and financial stability requirements.

In the longer term, the Trump administration’s strategy regarding cryptocurrencies could profoundly transform the structure of the American financial system. By making master account access an explicit public policy objective, the administration opens the door to deeper integration of digital assets into the traditional banking system, with all the implications this carries in terms of financial stability, consumer protection, and international competitiveness. This transformation could also have repercussions on the international role of the dollar, which remains the world’s primary reserve currency, and on America’s ability to maintain its leadership in the global financial system.

Sources

• Executive Order: Strengthening American Leadership in Digital Financial Technology — White House
• Trump Executive Order Establishes Federal Policy Supporting Digital Assets — Debevoise & Plimpton
• The Real Target of Trump’s Crypto Strategy is the Federal Reserve — Harvard Kennedy School
• Federal Register: Strategic Bitcoin Reserve — Federal Register
• Master Account Access Guidelines Finalized — Mayer Brown
• Under the Fed’s Tiered System — Consumer Financial Services Law Monitor