I’ve been in and around the banking industry for 20+ years. I started out as a teller and finished my time inside financial institutions in the C-suite, as a Chief Lending Officer.
For the last nine years I’ve been building products for the banking industry. Everything from deposit systems, to lending, to digital banking platforms, money movement, i.e. payments, and beyond.
A few years back there was a general concern that the FAANG’s (Facebook, Amazon, Apple, Google of the business world were coming for the financial services industry. Those technological giants have massive user bases, advanced solutions, products that include the movement of money, and massive amounts of capital to deploy. Their sheer scale alone led many to believe that, should they choose to, any one of them, or all of them, could make a play into traditional financial services.
While FAANG has made inroads into financial services, including offering debit/credit cards, embedded finance, loans to merchants and more, they have largely stuck to their primary business models. Which makes sense. Apple hit $2B in market cap by being dominant in the consumer technology space. Google did so largely through owning the internet search business. No need to expand into heavily regulated industries when business is booming.
The real threat is companies like Coinbase, who through recent product launches and partnerships are essentially a quasi-financial institution at this point.
Think about it. What is a financial institution’s typical product suite?
- Deposit accounts
- Loans
- Digital banking platforms
- Debit/Credit cards
- SMB products
Coinbase, up until recently, was a cryptocurrency trading platform. Full stop.
That’s not the case anymore.
In fact, over the last few weeks alone they’ve been announcing a variety of new products and/or partnerships that have expanded their product offering by leaps and bounds.
They are all but a bank, just without the FDIC insurance.
✅Deposits: they will securely hold your cryptocurrencies and stablecoins (more on these in a bit) for you. In fact, some reports claim that Coinbase has $400M in value on their platform. If accurate, that would make Coinbase the 21st largest bank in the US.
✅Loans: As of April, 2025, Coinbase customers can get loans, paid out in USDC (one of two of the most popular stablecoins) against their Bitcoin values on deposit with the company. As of June 2025, Coinbase has done over $130 million worth of these loans.
✅Debit/Credit Cards: Six days ago, as of the time of me writing this (June 18th, 2025), Coinbase announced the One Card. A credit card with a 4% Bitcoin-back return on every purchase.
✅Digital Banking Platform: their app is world class. It’s easy to use and intuitive.
Not to mention, they are also looking at getting into the tokenized stock business, to compete with stock-trading platforms such as Robinhood, with a request for SEC approval also coming this month.
Tell me that doesn’t sound a lot like a bank’s product mix.
Or, at least quasi-banking.
All in less than six months.
For all of those reasons, Coinbase has been a sleeper that traditional financial institutions have largely chalked up to only a cryptocurrency product. What has been ignored is that moving cryptocurrency over a blockchain is a fee-efficient method of moving money. Whereas sending a wire may cost upwards of $50, transferring the same amount of money via a cryptocurrency, like $BTC, costs pennies. Or less. On the Solana network, fees can run as low as $0.00025.
The challenge, until lately, has been the volatility of $BTC’s value. Who wants to use a highly-volatile “currency.” Although values continue to fluctuate, large swings in the value of Bitcoin have been limited recently. As of today, June 18th, 2025, $BTC is valued at over $105k per coin.
So, all you need to do is limit the volatility.
Enter stablecoins, specifically USDC.
The two largest stablecoins are Tether and USDC. It just so happens that Coinbase played a role in the creation of the USDC stablecoin.
In 2018, Coinbase and a company called Circle jointly created the USDC stablecoin. They co-founded the CENTRE Consortium, which was designed to govern the stablecoin. Then in 2023, CENTRE was dissolved and Circle took full control of UDSC issuance and governance.
Coinbase isn’t out of the picture.
Coinbase owns equity in Circle and still earns revenue both from off-platform and on-platform USDC activity.
Not only should financial institutions be worried about Coinbase as a quasi-bank, they should be concerned about the growing prevalence of stablecoins. Something traditional financial institutions aren’t equipped to handle.
If you still aren’t convinced, the largest bank in the US, JP Morgan Chase, announced one day ago that they are launching their own stablecoin-like token.
Stablecoins have a long way to go to fully supplant other money movement methods. USDC averages around $9B-$12B per day in volume. ACH equates to $169B per day or Fedwire with its $4.1T per day.
Still, that kind of USDC volume, which doesn’t include other stablecoins or cryptocurrency volumes, is eye-opening for such an early phase of a product’s lifecycle.
With its quasi-bank product offering and deep embeddedness in stablecoins through its role with USDC, Coinbase is the company, or at least one of the key ones, that I’d be concerned about as a financial institution or a provider of services to financial institutions. Small banks and credit unions aren’t going to be quick to take up the use cases for stablecoins, as a general rule, and when they do they won’t be equipped to manage them. But, guess who is and can? Coinbase. On top of deposits, loans, and cards. All that is missing is federal insurance for deposits. Which Coinbase is actively pursuing.
Folks, this is how you disrupt an industry. You quietly eat away at its edges, attacking use cases that the competition is ignoring all together or they aren’t focused on. Then one day, bam!, you show up with an offering that looks a lot like theirs, but is more advanced, more modern, more appealing to the newer customers in the market (in this case, younger generations).These are the things on my mind right. How stablecoins could completely disrupt the money movement/payment rais across the globe and how AI is reducing the barriers to entry for new businesses even further.
If you are looking to build a business, these are two areas you should be exploring.
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