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Coinbase Has More Than $28 Billion Circle Investment – Will BASE Boost USDC Takeup?

Last Updated May 10, 2024 8:32 AM
Teuta Franjkovic
Last Updated May 10, 2024 8:32 AM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Coinbase holds a significant stake in Circle, manages billions in USDC assets, and can even mint new USDC.
  • Base aims to make crypto know your customer and anti-money laundering checks easier
  • These technologies may serve as drivers for increasing revenue and boosting USDC affirmation with other companies.

Anthony Bassili, Coinbase’s head of tokenization, said  his company was managing over $28 billion of total assets in Circle. Not only that, but Coinbase can also mint USDC.

The exchange is confident its recent attempts to boost USDC storage on its Base platform will encourage other companies to follow suit.

Coinbase Base Blockchain Prioritizes Security with EVM, USDC

Coinbase hopes for a future where a billion users engage with decentralized applications across countless blockchains.

Its infrastructure includes the Ethereum Virtual Machine (EVM) and Circle’s USD Coin (USDC). These, it claims, ensure strong security and integration.

Bassili told the TokenizeThis conference in Miami, Florida, that the company’s Ethereum layer-2 scaling solution, Base, should streamline know your customer (KYC) and anti-money laundering (AML) checks. It uses the Ethereum Attestation service combined with Coinbase verification. This assigns a unique tag to each user’s smart wallet.

Customers can access Coinbase verification once they have completed the necessary KYC procedures.

He commented:

“We expect that eventually to evolve into something like a KYC reliance model. […] And it will start to form market structure that makes it a lot easier for a simpler KYC process.”

Over 300,000 wallets have already undergone attestation.

To provide customers with attested wallets and verified identities access to Web3, Base will use EVM networks. USDC will underpin the system, bolstered by Coinbase’s equity stake in Circle acquired in August. Bassili said: “Right now, we’re managing over $28 billion of total assets in Circle.”

Coinbase can also mint USDC.

As robust tokenized assets emerge across various asset classes, it may become feasible to trade assets directly with each other, bypassing the intermediary step of converting them into dollars, according to Bassili.

He said:

“I think […] we’re a while away from [that goal], because we need regulatory structures to show up, we need products themselves to be designed with identity checks instantly, and there is a lot of market structure that is still has to come.”

Subscription Revenue Jumps as Base and USDC Gain Traction

Since its launch in August, Coinbase’s Ethereum layer-2 chain, Base, has earned $56.1 million in fees . The latest quarterly report showed that the network experienced double the transaction volume of Ethereum and saw an 800% increase in developer activity.

Circle saw a 30% growth in market capitalization in the first quarter of 2024. As a result, Coinbase’s subscription and services revenue rose by a third, including a 15% rise  in stablecoin revenue.

While Coinbase has broadened its revenue sources through Base and USDC, the recent financial upswing largely stems from favorable market conditions.

For example, in this quarter, Bitcoin’s price  surged by 57% to a record high of $73,000. This came after the injection of over $50 billion into 10 spot exchange-traded funds, approved on January 11.

Coinbase’s Base Platform Poised to Amplify USDC Adoption

Coinbase is optimistic its recent initiative  to increase USDC storage on Base will not only enhance security and operational efficiency but could also set a trend, potentially boosting USDC uptake across the industry. Coinbase assures its users that their funds are securely managed.

In addition, Coinbase analyst David Duong says  the US approval of spot Bitcoin ETFs may have kickstarted an influx of fresh capital into the crypto market. Some of this, he says, has found its way into USDC due to its stability and clear regulatory standing. Indeed, a report suggested that Circle’s coin could benefit from proposed legislation.

USDC is also gaining traction in non-US markets . This international interest has contributed to USDC’s growing share in both spot and derivatives trading, with its activity now nearly fivefold. However, it still accounts for just 4% of the total global stablecoin volume on centralized exchanges.

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