According to a recent analysis by Wall Street brokerage firm Bernstein, cryptocurrency exchange Coinbase (COIN) is expanding its role far beyond simply distributing the USDC stablecoin. The company is now actively positioning itself as a central force in driving the adoption of Circle’s USDC across global payments and financial services.
Expanding Beyond Trading: Coinbase’s Strategic Moves
Coinbase has launched several new initiatives that highlight its commitment to broadening the use cases of USDC. These include:
- Coinbase Payments: A new payment stack developed in collaboration with Stripe and Shopify, designed to facilitate stablecoin-based transactions.
- Coinbase Business: A service tailored for startups and small companies, enabling them to integrate USDC into their financial operations.
- Derivatives Collaboration: A partnership with Nodal Clear to utilize USDC as collateral within U.S. futures markets.
These moves signal a strategic shift from being primarily a trading platform to becoming an infrastructure provider in the digital asset ecosystem.
The Infrastructure Behind the Growth
A significant portion of USDC activity is hosted on Coinbase’s Layer-2 blockchain, Base. Recent data highlights the scale of this adoption:
- More than $3.7 billion in USDC is currently hosted on Base.
- The network has already processed a staggering $6.8 trillion in USDC settlement volume year-to-date.
This massive throughput demonstrates the growing role of stablecoins in settling high-volume transactions efficiently and at low cost.
A Strong Financial Incentive
The relationship between Coinbase and Circle, the issuer of USDC, is not just strategic—it’s also financial. Coinbase holds a direct equity stake in Circle and benefits from a revenue-sharing agreement for USDC.
Under this agreement:
- Coinbase receives 100% of the interest income from USDC held directly on its platform.
- For USDC held off-platform, revenue is split 50:50 between Coinbase and Circle.
This model creates a powerful incentive for Coinbase to continue expanding the utility and circulation of USDC across both on-chain and traditional financial products.
The Rising Importance of Stablecoins
Stablecoins like USDC are cryptocurrencies pegged to stable assets, such as the U.S. dollar. They serve critical functions in the crypto economy, including:
- Facilitating trading and liquidity provision.
- Enabling fast and low-cost international money transfers.
- Serving as a gateway between traditional finance and digital assets.
Their reliability and stability have made them foundational to modern crypto markets.
How Stablecoins Contribute to Revenue Diversification
For Coinbase, stablecoins have become a major revenue driver beyond traditional trading fees. The company’s non-trading revenue has seen extraordinary growth:
- It increased from $181 million in 2020** to **$2.8 billion in 2024.
- Non-trading revenue now accounts for 42% of Coinbase’s total revenue.
This shift underscores the company’s strategic focus on scaling USDC utility across payments and decentralized finance (DeFi), establishing it as a long-term growth engine.
Analysts at Bernstein maintain an Outperform rating for both Coinbase and Circle, with price targets of $510** and **$230, respectively.
For those interested in exploring more about how major platforms are integrating stablecoin technology, you can view real-time integration updates.
Frequently Asked Questions
What is USDC?
USDC is a U.S. dollar-backed stablecoin issued by Circle. It is fully regulated and redeemable 1:1 for U.S. dollars, making it a trusted digital dollar for payments and settlements.
How is Coinbase promoting USDC adoption?
Coinbase is integrating USDC into its payment systems, business services, and derivatives markets. It also hosts significant USDC activity on its Base blockchain, enhancing its utility across ecosystems.
Why are stablecoins important in crypto?
Stablecoins provide price stability in a volatile market, enable efficient cross-border payments, and act as a bridge between fiat currencies and digital assets, supporting broader adoption of blockchain technology.
What is the revenue model for Coinbase with USDC?
Coinbase earns interest income from USDC held on its platform and shares revenue with Circle for off-platform holdings. This creates a strong incentive to expand USDC’s use cases.
What is Base in relation to Coinbase?
Base is Coinbase’s Layer-2 blockchain designed to offer scalability and low-cost transactions. It has become a major hub for USDC transactions and DeFi activity.
Is USDC safe to use?
USDC is considered one of the most reliable stablecoins, backed by cash and short-duration U.S. treasuries. It is regularly audited and complies with U.S. money transmission laws.