Coinbase Pushes for Direct Fed Access as Reserve Account Debate Intensifies

Coinbase has formally responded to the Federal Reserve’s proposal to create “Reserve Bank Payment Accounts” for non-bank financial institutions, arguing that crypto platforms should be granted direct access to core settlement infrastructure such as FedNow and Fedwire.

The exchange positions the move as a structural modernization of U.S. payment rails rather than a niche crypto accommodation.

At the center of the debate is whether firms like Coinbase should be allowed to connect directly to the Federal Reserve’s settlement systems instead of operating through intermediary FDIC-insured banks, a change that could meaningfully alter cost structure and operational control.

Direct Access and Cost Structure Implications

Coinbase contends that direct access to Federal Reserve settlement rails would modernize payment infrastructure by reducing reliance on FDIC-insured partner banks. Today, crypto platforms must route customer funds and settlement flows through banking intermediaries, adding operational complexity and cost.

According to the filing, eliminating that layer could reduce transaction expenses for digital asset services by an estimated 20% to 30%. The exchange frames this not as a competitive advantage, but as infrastructure efficiency that aligns crypto-native firms more directly with the existing monetary plumbing.

The structural argument is straightforward: fewer intermediaries translate into lower friction, tighter settlement loops, and potentially faster capital movement.

Concerns Over Proposed Restrictions

While supporting the broader initiative, Coinbase criticized specific limitations within the draft framework. The current proposal includes:

• No interest paid on balances
• A $500 million cap on overnight balances

Coinbase warned that such constraints could render the accounts impractical for large-scale operations, describing them as potentially “dead on arrival” if implemented without modification.

For platforms handling significant transaction volume, overnight balance caps and zero-yield holdings could limit usability and reduce the economic incentive to adopt the framework.

Omnibus Accounts and Operational Efficiency

The exchange also urged regulators to allow omnibus customer accounts, which would enable firms to pool user funds into a consolidated structure for more efficient settlement processing.

Omnibus arrangements are common in financial markets and could streamline liquidity management for crypto platforms. Without such flexibility, direct access may offer limited operational advantage compared to the current correspondent banking model.

Market Reaction and Regulatory Tension

Following the publication of the comment letter alongside strong quarterly earnings, shares of Coinbase rose approximately 15%, reflecting investor sensitivity to regulatory progress tied to infrastructure access.

The broader debate remains unsettled. The Federal Reserve, under the guidance of Christopher Waller, has indicated the framework could be finalized by the end of 2026. However, major banking groups, including the Bank Policy Instituteand the Financial Services Forum, have formally opposed the proposal, arguing that granting settlement access to less heavily regulated entities may introduce systemic financial stability risks.

Structural Implications

At its core, the debate is not about crypto adoption but about institutional alignment. Granting non-bank platforms direct access to Federal Reserve settlement rails would represent a structural shift in how payment infrastructure interfaces with emerging financial technology firms.

Whether the framework evolves into a functional pathway or remains constrained by balance caps and yield restrictions will determine whether the proposal materially changes the competitive landscape, or remains a limited pilot concept within a tightly controlled perimeter.

The post Coinbase Pushes for Direct Fed Access as Reserve Account Debate Intensifies appeared first on ETHNews.