Coinbase Plants Stablecoins in 1,000 US Regional Banks…September 15 Clarity Act a 'Watershed Moment'

▲ Stablecoin ©Go Da-sol

Coinbase is connecting its stablecoin payment network to over 1,000 US regional banks and credit unions, challenging the opposition logic centered on large banks. This expansion strategy has emerged as a new variable in the stablecoin regulation debate ahead of the September 15 Senate vote on the US cryptocurrency market structure bill, the Clarity Act.

According to investment media The Motley Fool on September 12 (local time), Coinbase has partnered with payment infrastructure company Moov to provide stablecoin payment and settlement services to over 1,000 regional banks and credit unions across the United States. This approach integrates Coinbase's digital asset infrastructure into Moov's payment platform, enabling each financial institution to accept stablecoins without building its own blockchain.

Stablecoins are cryptocurrencies whose value is pegged to fiat currencies like the US dollar or Euro. They can be held without a bank account and allow for 24-hour payments. They enable faster and cheaper transfers than traditional fiat currencies and can act as a 'bridge currency' connecting different fiat currencies in cross-border transactions. In the case of USD Coin (USDC), jointly developed by Circle and Coinbase in 2018, interest income is generated from reserve assets such as cash and US Treasury bonds. Coinbase earns revenue from the reserve assets of USDC held on its platform, currently generating about a quarter of its total revenue from stablecoin reserve assets.

This partnership comes amidst a clash of interests between traditional large banks and the stablecoin industry. While large banks view stablecoins as a threat to existing fiat-based deposit accounts, Coinbase is demonstrating through the adoption by regional banks and credit unions that not all financial institutions oppose stablecoins. The Motley Fool assessed that smaller financial institutions are likely to adopt stablecoins to acquire new customers and enhance their competitiveness.

The key lies in the upcoming September 15 Senate procedural vote on the Clarity Act. Stablecoin proponents, including Coinbase and Circle, can argue, based on the partnership with Moov, that stablecoins can foster competition in the banking industry. The media suggested that if the Clarity Act applies more lenient rules to stablecoin revenue, assigns cryptocurrency oversight to the US Commodity Futures Trading Commission (CFTC) instead of the US Securities and Exchange Commission (SEC), and establishes clear rules for tokenized assets, institutional investors' cryptocurrency purchases could expand.

Conversely, if the Clarity Act's processing is delayed again, large banks continue to oppose stablecoins, and interest rates rise, such optimism could falter. Coinbase's stock price has fallen by approximately 50% over the past 12 months. The Motley Fool assessed that rather than assuming a new crypto bull market will begin and boost trading revenue and stock prices, it is necessary to first confirm the results of the September 15 Clarity Act vote.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*