Coinbase Gave Up Some Revenue to Fight the Stablecoin War — Heard on the Street — WSJ

By Telis DemosWith crypto ascendant at the end of last year, Coinbase Global printed a huge fourth quarter. Transaction revenue nearly tripled from the prior quarter, to more than $1.5 billion, the company reported late Thursday.But one closely-watched revenue line was down. Stablecoin revenue was about $226 million in the fourth quarter, down from roughly $247 million in the third. The drivers were two-fold: One, the impact of relatively lower interest rates during the quarter. But two, more notably, was the addition of new partners to the USDC stablecoin ecosystem.Coinbase said that along with partner Circle Internet Group, it is aiming to grow USDC in part by sharing the economics of the coin with more partners, incentivizing its adoption. USDC generates revenue for Coinbase through its share of the interest revenue earned on the money that backs the coin, which is designed to represent a U.S. dollar."We may have short-term economic hits, but we think this will lead to long-term economic growth," Coinbase Chief Financial Officer Alesia Haas told analysts.Coinbase Chief Executive Brian Armstrong on Thursday laid out Coinbase's big ambitions: "We also have a stretch goal to make USDC the No. 1 dollar stablecoin."According to CoinMarketCap, USDC is currently the second-largest stablecoin by market value, at around $56 billion as of Friday morning. That's up nearly 30% since the end of last year, but it remains well behind Tether's roughly $142 billion.With that market cap expansion, Coinbase is already anticipating growth in its stablecoin revenue quarter-over-quarter in the first quarter of 2025, the company said Thursday.Crypto advocates believe that stablecoins have a future not just as a transaction token for traders, but in payments and savings as well.But there are still many players angling for a stake in this future. PayPal has had a stablecoin since 2023. And Robinhood Markets this week also reiterated its own ambitions. It recently partnered with other crypto firms in the Global Dollar Network, with its own stablecoin, Global Dollar, or USDG. That relatively nascent coin is at around $92 million in market value, according to CoinMarketCap. "There's going to be a lot more" on the Global Dollar Network, Robinhood CEO Vlad Tenev told analysts this week. "We're going to be investing in the space."Crypto can be cyclical, and trading booms can be followed by busts. But stablecoins represent a far steadier potential revenue stream, not just from interest earnings but also more day-to-day banking-type activities.Whether a more mature stablecoin market would naturally gravitate toward a single coin, or perhaps a handful of winners, remains to be seen. But clearly the race is on.This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).