The charter strategy question – Payment Account, SPDI, or full national charter

The proposed Payment Account is simply the newest of three separate routes available to achieve direct settlement access. For sophisticated firms, all three routes should be under consideration now, rather than waiting for the results of the Request for Information (RFI) and regulatory deliberations to culminate in the final rule. 

For a significant segment of firms, the proposed payment account may not prove to be the most rational choice once the full option set is understood – and some firms are already putting this logic into practice. On March 4, 2026, Kraken Financial became the first firm in US history to obtain direct access to Federal Reserve payment infrastructure through the state-chartered digital asset bank route.¹ Rather than waiting for the payment account framework to materialize, Kraken had pursued a Wyoming Special Purpose Depository Institution (SPDI) charter to become a state-chartered bank and apply for a master account through existing channels. The Kansas City Fed approved a limited-purpose account in March 2026, with restrictions tailored to Kraken’s specific business model (a narrower outcome than a full unrestricted master account) but still providing it with direct Fed access.²

Additionally, London-based Revolut, which was only recently approved for a full banking license in its home country, has applied again for a US banking license that would enable it to accept insured deposits and reduce its reliance on partner banks.³ Where successful, this strategy might lead to a model under which large fintechs offer deposits, lending, and payments – accelerating competition with incumbent banks, while also expanding regulatory oversight of platform-based financial ecosystems.

Path 1: the proposed Payment Account

The Fed’s proposal would allow a qualifying non-bank to access direct Fed settlement without a bank charter. Access is deliberately narrower than that of a full master account. The tradeoffs were set out in the first part of our article series and include no interest on balances, no access to Fed credit facilities, mandatory prefunding, and balance caps. Other downsides include unclear application and capability requirements, an uncertain implementation timeline, and a real risk of Congressional intervention, regulatory delays, or a change in Fed priorities and the current political environment. For a payment firm that requires limited domestic settlement capability and has no appetite for the regulatory burden of bank status, this is the lowest-friction path – providing the proposal materializes on a viable timeline.

Path 2: the Wyoming SPDI route

The charter for SPDI in Wyoming caters to companies involved in digital assets and payments, but that do not have the ambition to engage in all the activities carried out by commercial banks, most notably lending. SPDIs work on a full-reserve model in which 100 percent of client deposits are backed by reserves, and an SPDI cannot engage in lending – thus largely eliminating credit risk. As a state-chartered bank, an SPDI has a legal right to apply for a master account that, potentially, entitles it to a broader range of benefits than those offered by the proposed new Payment Account.

However, as shown by the Kraken case study, the Fed may still apply individual terms to each particular account holder. Furthermore, the tradeoffs include becoming a regulated bank, which involves examination schedules at the state level, capital requirements, and the necessary governance framework, not to mention the considerable amount of time required to become a bank, with no certainty about the final outcome. Kraken’s journey to becoming a bank took nearly six years of sustained regulatory engagement; Custodia Bank, which also gained a charter under the Wyoming SPDI program, failed to get its master account from the Fed in 2023.

Path 3: the OCC national bank charter

A full OCC national bank charter provides the broadest and most established path to full master account eligibility and accessing the Federal Reserve system. For a payment firm with sufficient scale, a national bank charter eliminates many of the access restrictions and account limitations imposed by the Payment Account framework. The trade-offs are correspondingly heavy, and they include FDIC insurance, full prudential regulation, capital adequacy ratios, Community Reinvestment Act (CRA) obligations, and the full weight of banking regulation. A national bank charter can be the correct answer for firms with large payment volumes, balance sheet size, and ambitious strategic goals. However, it represents the upper bound of the charter strategy spectrum and, for most non-banks, is unlikely to be the optimal choice. 

How to think about the choice

The three paths are not mutually exclusive in terms of long-term institutional trajectories, but they are mutually exclusive in terms of near-term investment decisions. The right choice will be driven by three variables: the amount of access the institution actually needs; the level of regulatory burden it can realistically sustain; and the timeline uncertainty it can tolerate without losing strategic momentum.

A high-volume remittance platform with domestic-focused flows and a lean compliance team may be best positioned for the proposed Payment Account, provided this materializes on a reasonable timeline. A crypto-native firm with balance sheet depth, an established regulatory relationship, and ambitions extending beyond payment routing into custody and asset management, may find the SPDI route more rational – despite the longer lead time. A firm with the scale, regulatory maturity, and national ambitions of a large fintech may eventually find a full national charter worth the overhead. 

The point is not that one path is universally correct; it is that the Payment Account proposal should be evaluated as one option within a broader charter strategy conversation. It should not be the default answer simply because it requires no change in legal status.

Kraken’s approval adds an important dimension to the debate, illustrating the potential advantages of the SPDI path.  As more digital assets and payment firms evaluate this route, a portion of the institutions the Payment Account was designed to serve may self-select toward full bank status at the top end or remain with indirect sponsorship at the bottom. This could leave the Payment Account competing for a narrower segment of the market than the Fed anticipates. That dynamic would complicate the revenue and competitive picture for traditional sponsor banks, who would face the prospect of losing clients not only to a limited Payment Account, but potentially to a full banking charter.

A structural question runs underneath the proposal: once non-bank institutions hold direct Federal Reserve accounts, how will supervisory expectations be applied with the depth and consistency typically associated with bank examination frameworks? A master account holder enters regular prudential examination cycles under federal and state bank supervisors, providing structured visibility into its liquidity position, operational dependencies, and settlement exposure. A non-bank payment account holder may instead operate across a combination of state Money Transmitter License (MTL), Consumer Financial Protection Bureau (CFPB) oversight, and FinCEN registration. However, this is a less cohesive and intensive supervisory regime – and the oversight gap is not marginal. 

The concern is not that non-bank participants are inherently dangerous; it is that direct access could outpace the supervisory infrastructure needed to observe the risk accumulating in the system. The EU had to address similar questions, even with the relatively harmonized PSD2 licensing baseline across member states. On the other hand, the US is starting from a significantly less coherent oversight position. Implementation risk is higher in the US than in peer markets, for both structural and political reasons. 

The proposed Payment Account framework is not yet a settled policy. The RFI comment period has closed, which is a meaningful step, but the political environment is uncertain, and Federal Reserve independence is under more scrutiny than it has been in decades. Crypto and non-bank financial regulation are actively contested across multiple branches of government. Congress has repeatedly shown interest in how payment infrastructure access is governed, and this has not consistently been in the direction of expanding access. Any of these strands has the potential to cause delay, significantly impact the structure, or even preclude it from being completed at all. 

Waiting for regulatory clarity is itself a strategic choice, and probably the wrong one. Firms that have invested in compliance systems, liquidity systems, and chartering approaches to prepare for any of the three possible paths to direct settlement access will have done well, irrespective of the outcome of the ruling. Waiting for the situation to clear up might mean missing an important chance to move more quickly than competitors.

Next steps – invest early to secure future leadership

By separating limited-purpose settlement access from the broader credit, funding, and liquidity privileges of a full master account, the Federal Reserve has proposed a framework in which participation depends on demonstrated control maturity rather than charter status. 

The industry shift touches every stakeholder differently. For sponsor banks, the framework introduces a repricing story for specific services rather than a more general competitive headwind. Float income is the most direct exposure, while processing fees face compression as fintechs gain negotiating leverage. Compliance and governance services represent the one stream with genuine upside, for banks willing to reframe themselves as infrastructure providers rather than access gatekeepers.

For institutions seeking direct access, the opportunity to reduce sponsor dependency is real, but the choice of charter strategy requires thought, and economics require honest modeling. Building examination-ready compliance and liquidity infrastructure takes time and capital, and the sponsor fee savings typically will not exceed the build cost for two to three years. High-volume payment businesses have the transaction volumes to make that investment work, while BaaS-adjacent and embedded finance models face a more complicated calculation.

Access-seeking institutions that invest early in liquidity infrastructure, compliance engineering, governance alignment, and deliberate charter strategy will benefit from lower costs and faster settlement, regardless of which access path ultimately proves most viable. The Payment Account proposal may be narrow by design, but the near-term decisions it forces on every institution in the ecosystem are multifaceted and complex.

References 
¹ https://www.federalreserve.gov/frrs/statutes/section-11c-master-account-and-services-database.htm
² https://www.kansascityfed.org/newsroom/2026-news-releases/federal-reserve-bank-of-kansas-city-approves-limited-account 
³ https://www.reuters.com/sustainability/boards-policy-regulation/revolut-files-us-bank-charter-names-duransoy-us-ceo-2026-03-05/