Coinbase introduces a stablecoin payments service and USDC derivatives. It seeks to reduce fees, grow adoption, and transform the world of e-business.

Coinbase Global Inc. has developed Coinbase Payments, which is a leading-edge platform aimed to become a standard in incorporating stablecoin payments into the $6 trillion electronic commerce sector. This project makes the stablecoins, specifically USDC issued by Circle, an alternative way of transferring payments when compared to the traditional system, such as Visa and Mastercard.

It also guarantees the merchants quicker settlements, reduced charges, and access to a wide range of customers worldwide. This new product will attract the attention of small-to-medium businesses across thousands of e-commerce platforms, which are in need of cheaper payment solutions similar to the services offered by traditional payment processors.

Coinbase Stablecoin Payments Will Reduce Transaction Fees

One of the products provided by this platform is a checkout product that allows easy payments with crypto wallets, e.g., Coinbase Wallet, MetaMask, and Phantom. This means there’s no more need for customers to go through third-party websites to create wallets, thereby increasing the transaction completion rate.

Another product is the connectivity layer. It makes the process of authorizing transactions, refunds, and controlling subscriptions easier, and the payments protocol enables merchants to transact blockchain money without having knowledge of cryptocurrencies.

Its simple interface will ensure that the use of stablecoins is made available to businesses that are not familiar with blockchain technology. Shopify entered into a collaboration with Coinbase and Stripe to allow payments using USDC on Coinbase’s Base network, a Layer 2 blockchain running on Ethereum.

The partnership takes advantage of Base to provide merchants with fast settlements and low fees as compared to conventional credit card processing systems.

The recent acquisition of Privy by Stripe also makes this ecosystem even stronger by allowing merchants to install crypto wallets right into their websites and accept payments. This solution is focusing on one major issue that online retailers face: high transaction fees, which are a significant drain on the profitability of these small firms.

Coinbase Allows USDC as Collateral for Regulated Futures Trading

In a related yet independent move, Coinbase Derivatives has also struck an innovative deal to trade derivatives in the U.S with the USDC serving as collateral for these contracts, and this could transform capital markets. This intention has seen Coinbase Derivatives partner up with Nodal Clear.

USDC (a stablecoin in which Coinbase has a minority stake) has a market capitalization of $61.5 billion. Coinbase hopes to establish a precedent of stablecoin integration in derivatives through its collaboration with regulators.

Its purchase of the Futures Exchange, FairX, in 2022 and obtaining the license to offer crypto derivatives to the United States retail consumers in 2023 hints at its longevity in this market. These moves come amid a key development for stablecoins, with the U.S. Senate approving legislation this week that would regulate the industry.

This bill, which should become a law in the near future, presupposes that the stablecoins are to be secured by liquid assets such as U.S. dollars or short-term treasury bills, while issuers are to disclose the amount of reserves on a monthly basis.

Stablecoin Boom Happens on Regulation Certainty

The clarity with regard to this regulation has caused optimism among many analysts who view stablecoins as a way to link cryptocurrency and conventional finance. Owen Lau, an analyst at Oppenheimer & Co. said stablecoins have the potential to disrupt consumer payments and capital markets, a sentiment that corresponded to a stock price reaction of Coinbase, which shot up 17% after the announcements, reaching a stock price of $296.46.

They have been in use in the decentralized finance (DeFi) sector for purposes like borrowing and lending, and the new legislation may speed up their usage even more. A commodity futures trading commission (CFTC) committee suggested in the past year that non-cash security property in blockchains should be increased, a policy that is catching on.

JPMorgan Chase & Co. is also making a venture into the stablecoin market, having introduced a pilot of tokenized U.S. dollar deposits (JPMD) on the Base network at Coinbase. The step indicates an increasing institutional interest in stablecoins, which can provide instant payment options with price efficiencies.

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