In a significant move, Coinbase has urged the Federal Reserve to permit cryptocurrency firms to gain direct access to its payment systems. The exchange has formally submitted a proposal advocating for a specialized Federal Reserve account tailored for payment processing. This initiative aims to modernize the U.S. payment infrastructure, aligning it more closely with international practices.
The proposal highlights a special-purpose Reserve Bank payment account, which would enable qualifying non-bank institutions to process transactions directly with the Federal Reserve without necessitating a full commercial banking charter. According to Coinbase, this direct access could result in lower operational costs and diminish the counterparty risks associated with intermediary banks.
Faryar Shirzad, Coinbase”s chief policy officer, emphasized that several countries, including the United Kingdom, the European Union, Brazil, and India, already provide similar access to crypto firms, thereby enhancing competition and mitigating settlement risks. As the Federal Reserve reviews feedback from a public comment period that closed on February 6, 2026, the landscape for crypto payment integration hangs in the balance.
Proposed Payment Account Structure and Concerns
Under the proposed framework, the Federal Reserve would offer a limited array of functionalities. Eligible firms would have access to systems such as Fedwire and FedNow, but they would be excluded from utilizing the discount window or earning interest on their balances. Coinbase has voiced concerns regarding these restrictive conditions, arguing that such limitations could hinder widespread adoption among qualified institutions.
The exchange specifically pointed out the detrimental impact of not allowing interest on end-of-day balances and imposing low overnight balance limits. These stipulations could significantly reduce the utility of the accounts for large-scale payment operations. Furthermore, Coinbase challenged the rationale behind balance-sheet limits, asserting that payment processing risks are primarily operational and do not typically necessitate capital reserves linked to balance sheet size.
In its letter, Coinbase requested authorization to hold omnibus customer balances, which would facilitate more efficient settlement processes. This request aligns with sentiments echoed by fintech advocacy groups, including the American Fintech Council, which argue that broader access would promote competition and lessen reliance on traditional financial intermediaries.
Banking Sector Reactions and Regulatory Implications
However, traditional banking institutions have expressed apprehension regarding the proposal. They warn that granting access to non-bank entities could introduce additional systemic risks, pointing out that these firms may lack the same supervisory history as conventional banks. In contrast, crypto companies assert that the existing system stifles innovation and that models successfully implemented in other jurisdictions should serve as a precedent.
The implications of this proposal extend to crypto-focused banks like Silvergate and Signature, which currently play crucial roles as intermediaries for crypto-dollar transactions. A favorable decision from the Federal Reserve could alter the competitive dynamics for these institutions. A final decision is anticipated in mid-2026, with the potential for the payment account to be operational by the fourth quarter of that year.
In addition to the discussions surrounding the proposal, the White House has scheduled a meeting between senior officials and representatives from both sides to address concerns pertaining to financial stability and innovation in the evolving landscape of digital finance.
