Coinbase Urges Fed to Modernize US Payments to Match European Standards

Coinbase, the largest U.S.-based crypto exchange, has submitted a formal letter to the Federal Reserve supporting a proposal to grant non-bank financial institutions access to specialized payment accounts. The proposal, known as the special-purpose Reserve Bank payment account, could allow crypto firms and fintech companies direct access to the Fed's payment rails without requiring full commercial banking charters. The initiative is part of broader efforts to modernize the U.S. financial system and align with global standards, such as those in the UK, EU, and Brazil.

The proposed account structure would allow eligible institutions to clear and settle transactions directly with the Fed. This access could reduce costs and counterparty risk for crypto companies that currently rely on intermediary banks to facilitate dollar transactions. The Fed is reviewing public feedback after the comment period closed on February 6, 2026.

Fintech advocacy groups, including the American Fintech Council, are also pushing for the change, arguing that it would promote competition and reduce reliance on traditional banking intermediaries.

Why Did This Happen?

Coinbase and other fintech companies argue that the current system imposes unnecessary operational barriers on crypto and digital asset firms. These firms must rely on a small number of commercial banks to access traditional payment systems, which increases costs and operational complexity. The proposal could allow them to settle transactions directly with the Fed, bypassing the need for a full commercial bank partnership.

The Federal Reserve is considering a limited access model, which would provide a narrow set of functions without extending full banking privileges. This includes access to systems like Fedwire and FedNow but excludes the discount window and interest on balances.

How Might This Affect the Financial Sector?

Traditional banks have expressed concerns about the proposal, warning that it could increase systemic risk by allowing non-bank institutions to access the Fed's payment infrastructure without equivalent oversight. They argue that these firms may not have the same supervisory history or risk controls as traditional banks.

Crypto firms and fintech companies counter that the current structure limits innovation. For example, Coinbase has highlighted that similar access is already available in other jurisdictions, which has helped reduce settlement risk and increase competition.

The debate has also raised questions about the future role of commercial banks in the crypto and digital asset ecosystem. If approved, the proposal could reduce the competitive advantage held by crypto-friendly banks such as Silvergate and Signature.

What Are Analysts Watching Next?

The Federal Reserve is expected to finalize its decision in mid-2026. If the payment account is approved, it could go live as early as Q4 2026. The outcome will likely influence how crypto firms integrate with U.S. payment systems and whether limited central bank access becomes a permanent feature of the financial landscape.

Investors are monitoring the regulatory landscape for any changes that could reshape the competitive environment. The proposal could impact hiring trends in the crypto sector, with increased demand for compliance specialists and payment infrastructure experts.

The White House is also expected to play a role in mediating the debate between traditional banks and crypto firms. A meeting involving senior officials and representatives from both sides has been scheduled to address concerns around financial stability and innovation.