Ripple Backs Fed’s ‘Skinny’ Account Plan

Stu Alderoty, the chief legal officer of Ripple, recently told Reuters that a “skinny” master account would still be an attractive option for the company. 

The CLO has opined that it should give traditional banks “some comfort.”

A skinny account, explained    

A Federal Reserve master account is the core deposit and payment account that the Fed offers to depository institutions. The firms that have such accounts can send and receive wholesale payments over Fed payment rails of the likes of FedNow and settle in central-bank money.

Fed Governor Christopher Waller recently floated the idea of a “skinny” master account, which, as the name suggests, would serve a a lite version of a full master account. A skinny account would have such limitations as no access to emergency funds and no interest on balances. 

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The Fed is currently in the process of studying Wallet’s “skinny” account idea, meaning that there will be no immediate rollout. 

Pushback from banks 

As reported by U.Today, Ripple applied for a Fed master account earlier this year. This would allow it to quickly redeem the reserves that are backing the RLUSD stablecoin. 

Anchorage Digital Bank, Paxos Trust Company are also among the crypto firms that have applied for Fed master accounts. 

There is a rather strong pushback from the banking sector, which is worried about financial stability and growing competition that could cost them market share and fee income. However, Walker’s proposed prototype could be an acceptable compromise.