Coinbase News: Coinbase Urges Federal Reserve to Open Payment Rails to Crypto Firms

Key Insights:

• Coinbase urges the Fed to grant crypto firms direct payment rail access through a limited special-purpose account model.
• The exchange opposes balance limits and no-interest rules, calling them restrictive for large-scale payment operations.
• Banks warn of systemic risk, while regulators review the proposal ahead of a mid-2026 decision timeline.

Coinbase news moved into focus after the exchange formally urged the Federal Reserve to open its payment rails to crypto firms. The company submitted a letter supporting a proposal for a payments-specific Federal Reserve account. It argues that direct access would modernize the U.S. payment system and align it with global standards.

The proposal centers on a special-purpose Reserve Bank payment account. This structure would allow eligible non-bank institutions to clear and settle transactions directly with the Federal Reserve. It would not require a full commercial banking charter.

Coinbase stated that direct access could lower operational costs. The company also said it could reduce counterparty risk tied to intermediary banks. The Federal Reserve closed its public comment period on February 6, 2026, and is reviewing feedback.

Faryar Shirzad, Coinbase’s chief policy officer, said other jurisdictions already provide similar access. He cited the United Kingdom, the European Union, Brazil, and India. According to Shirzad, those systems increased competition and reduced settlement risks.

Coinbase News: Payment Account Structure and Key Objections

Under the proposal, the Federal Reserve would offer limited functions. According to Coinbase news, eligible firms could access systems such as Fedwire and FedNow. However, they would not gain access to the discount window or earn interest on balances.

Coinbase argued that the current draft contains restrictive conditions. The company described some limits as unnecessarily constraining. It warned that the combined restrictions could limit adoption by eligible institutions.

Specifically, Coinbase criticized the lack of interest in end-of-day balances. It also objected to the proposed low overnight balance limits. The exchange said these features could reduce the account’s utility for large-scale operations.

In its letter, Coinbase challenged the logic behind balance-sheet limits. The company stated that payment processing risks are operational in nature. It argued that such risks do not typically require capital buffers tied to balance sheet size.

Coinbase also sought permission to hold omnibus customer balances. The exchange said pooled customer funds would enable more efficient settlement. It put this request in a simplified context with the goal of commercial viability.

Fintech advocacy groups echoed similar positions. The proposal was supported by the American Fintech Council. The group said wider access would foster competition and make people less dependent on traditional intermediaries.

Banking Sector Concerns and Regulatory Timeline

Traditional banks raised concerns over the proposal. They warned that granting non-bank institutions access could create additional systemic risk. Banks also pointed out that these firms may not have similar supervisory histories.

Crypto firms countered that the current system restricts innovation. They pointed to models of access already in use in other jurisdictions. Coinbase news coverage has noted that similar frameworks are in operation abroad.

The debate is also impacting crypto-focused banks. If approved, the proposal could chip away at the competitive position of the likes of Silvergate and Signature. These banks currently serve as important intermediaries for crypto-dollar transactions.

The Federal Reserve is expected to make a decision in mid-2026. If approved, the payment account could be launched as early as the fourth quarter of 2026. The result will determine how crypto firms will integrate with the U.S. payment infrastructure.

In addition to the Coinbase news, the White House has planned a meeting between senior officials and representatives of both sides. The discussion will cover concerns for financial stability and innovation.