Coinbase supports a Federal Reserve proposal for non-bank financial institutions to access specialized payment accounts for modernizing the domestic financial infrastructure. The proposal would provide fintech and crypto-native firms direct access to the Federal Reserve’s payment rails, reducing reliance on intermediary banks for dollar transactions. However, Coinbase warns of overly restrictive limits risking the proposal’s effectiveness.

Coinbase’s chief policy officer, Faryar Shirzad, highlights similar access in the UK, EU, Brazil, and India, leading to increased competition and reduced settlement risks. The crypto giant argues that current restrictions in the Federal Reserve’s proposal could hinder the account’s utility for large-scale operations, such as the lack of interest paid on balances and low overnight balance limits.

In addition, Coinbase challenges regulators to reconsider balance-sheet limits, noting that payment service risks are operational rather than credit-related. The company advocates for the ability to hold “omnibus” customer balances to facilitate more efficient settlement processes. By pushing for a simplified framework, Coinbase aims to transition from the finance periphery to its regulated core, aligning with European standards for US payments modernization.

Read more at Yahoo Finance: Coinbase Urges Fed to Modernize US Payments to Match European Standards