Brian Armstrong, the CEO of Coinbase, stated that the cryptocurrency platform intends to grow into one of the largest financial service providers globally within several years, supported by conventional entities that keep embracing cryptocurrencies at an increasing pace.
When asked during the company’s conference call with analysts whether Coinbase intends to venture into conventional banking, Armstrong stated that instead of focusing on the past, his aim is to “look ahead and move towards where this opportunity is headed.”
“We’re mainly concentrating on trading and payment activities today…across four key customer segments: retail, small and medium-sized enterprises, institutional clients, and developers,” Armstrong stated during the Thursday quarterly earnings call.
Within five to ten years, our objective is to become the leading financial services application globally for those specific customer groups since we think cryptocurrency is reshaping the finance industry, and we hold the top position in the crypto sector,” he stated further. “These various types of assets—money market funds, real estate investments, stocks, loans—are progressively transitioning onto blockchain platforms.
Expanding platform
Coinbase mainly functions as a cryptocurrency exchange. However, over time, it has expanded into various additional offerings aimed at both individual and institutional users who seek alternatives beyond trading — such as payments using stablecoins, earning rewards with stablecoins and staking activities along with custodial solutions tailored for financial entities. More than 200 institutional clients utilize these services, which include companies like BlackRock, Stripe, and PayPal.
This week, the Office of the Comptroller of the Currency (OCC)
Cleared U.S. banks under its jurisdiction to engage in buying, selling, and serving as custodians for cryptocurrencies.
resources for clients, collaborating with the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) in easing strict crypto regulations over the last couple of months. In 2023, these three entities had
warned banks about collaborating with the industry
or offering crypto services.
As the Trump administration eases regulations on cryptocurrency,
The legislature is close to enacting stablecoin regulation.
Later this year, conventional financial institutions demonstrated greater enthusiasm for venturing into cryptocurrency-related services. In February, Brian Moynihan, CEO of Bank of America based in Charlotte, indicated this trend.
if regulation allows.
“I believe each significant banking institution will eventually adopt cryptocurrency… It’s a technological upgrade for the financial sector,” Armstrong stated. “We can provide numerous services for these banks. For instance, some require custody solutions whereas others prefer stablecoins.”
He went on to say that they’ve observed some enthusiasm from banks and various organizations aiming to develop their own stablecoins. However, they believe this might not be the most effective approach since stablecoins rely heavily on network effects. It’s crucial for them to maintain compatibility with other financial entities so as to facilitate payment settlements and perform numerous other functions.
Biggest driver
Stablecoins have become Coinbase’s biggest driver of revenue after trading. In the first quarter, revenue tied to stablecoins soared 50% from the year-earlier period and 32% from the fourth quarter. Coinbase is a cofounder of the popular USDC stablecoin, has a 50% revenue sharing agreement with issuer
Circle
and also makes 100% of the interest earned by USDC products on the Coinbase platform.
Armstrong mentioned that Coinbase aims for an ambitious target of making USDC the top stablecoin globally, a spot currently occupied by
Tether’s USDT
.
Armstrong stated, “If they achieve shared economic benefits, I fail to see why we wouldn’t witness an increase in partnerships between these banks and USDC. Regardless, Coinbase will assist in building the necessary infrastructure for everyone entering this sector… This is a key component of our strategy.”