By Coinbase Report: Here’s How Stablecoins Are Revolutionizing the Financial System
Last updated: December 5, 2023 05:12 EST
. 2 min read
Coinbase, one of the leading cryptocurrency exchanges based in the United States, has highlighted the importance of stablecoins in facilitating seamless transactions.
In a recent blog post, the San Francisco-headquartered exchange noted that many Americans are frustrated when dealing with the traditional financial system.
It argued that stablecoins offer a solution by providing “all the benefits of cash without the drawbacks.”
As a stakeholder in Circle, the issuer of the USD Coin (USDC) stablecoin, Coinbase asserted that physical cash no longer meets the expectations of digitally savvy consumers.
Interbank transfers can take days, while stablecoin alternatives in the crypto space are faster and more cost-effective.
“There are reasons why physical cash has been so popular for so long. It’s private; stays stable in times of economic volatility; and supports instant payments person-to-person,” the exchange wrote.
“These are strong upsides that we want to carry forward in payment systems of the future.”
However, regulatory barriers are hindering the United States from becoming a true “crypto hub.”
In contrast, countries such as Nigeria and Brazil are actively promoting stablecoin and cryptocurrency adoption on a global scale.
To address this issue, Coinbase emphasized the urgent need for clear and sensible regulations governing stablecoins.
The exchange said that such regulations are necessary to prevent the United States from falling behind in the rapidly evolving crypto landscape.
While the platform did not provide specific suggestions regarding stablecoin regulation, it called on the crypto community to engage with members of Congress and support legislation that enables stablecoins while ensuring consumer protection.
Coinbase also encouraged individuals to join communities advocating for comprehensive crypto regulations.
Despite their potential, stablecoins still face liquidity risks in extreme circumstances.
In March 2023, reports emerged that Coinbase extended a $3 billion credit line to Circle in an effort to restore the USDC stablecoin’s peg to the US dollar.
This credit line was provided after USDC deviated from its intended value due to Circle’s exposure of $3.3 billion to Silicon Valley Bank, which was taken over by the Federal Deposit Insurance Corporation following a bank run.
Coinbase Expands Global Presence Despite Regulatory Hurdles
Coinbase has been actively expanding its global presence.
Back in September, the exchange revealed that it secured an Anti-Money Laundering (AML) compliance registration from the Bank of Spain, making it a registered crypto exchange in the country.
The registration with the Bank of Spain allows Coinbase to offer its full suite of products and services to both retail and institutional users in Spain while ensuring compliance with the country’s legal framework.
Over the past year, Coinbase has obtained Virtual Asset Service Provider (VASP) registrations in several European countries, including Italy, Ireland, and the Netherlands.
It has also received in-principle approval and launched its services in Singapore, Brazil, and Canada.
The company’s push for global expansion comes amid growing regulatory hostility in the US.
Back in June, the SEC sued Coinbase for selling unregistered securities and a number of other alleged wrongdoings.
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