Coinbase, PayPal Join Forces in $2Tn Stablecoin Land Grab
Companies positioned as regulatory-compliant alternatives to offshore stablecoin operators.
The partnership will eliminate fees for converting between US dollars and PayPal USD (PYUSD) on Coinbase's platform, addressing a significant friction point that has limited stablecoin use beyond crypto trading.
PYUSD, launched in August 2023 on the Ethereum blockchain and later expanded to Solana in 2024, currently commands $888 million market capitalisation – a mere fraction of the $237 billion overall stablecoin market.
The partnership also extends PYUSD access to Coinbase's institutional clientele and PayPal's vast merchant network of more than 430 million consumer and merchant accounts worldwide.
This positions PYUSD to compete more effectively against dominant players in the space, including Tether's USDT with its $146 billion market cap and Circle's USDC at $62 billion.
"We're excited to be partnering with PayPal. Their more than 430 million consumer and merchant accounts offer an unprecedented opportunity to increase stablecoin adoption globally," said Brian Armstrong, Coinbase's chief executive, highlighting the growth potential.
The collaboration comes as Coinbase reported stablecoin revenue of $910 million in 2024, marking a 31% increase from the previous year.
PayPal's stablecoin will offer American holders a 3.7% annual yield starting summer 2025, creating additional incentives for adoption and contributing to the growing trend of traditional financial institutions embracing blockchain technology and cryptocurrency infrastructure.
"For years, we've worked with Coinbase to enable a best-in-class integration. We are excited to drive new, exciting, and innovative use cases together with Coinbase and the entire cryptocurrency community, putting PYUSD at the centre," said Alex Chriss, President and CEO of PayPal.
The companies' ambitions extend beyond facilitating easier payments.
They plan to explore integrating PYUSD into decentralised finance (DeFi) applications — blockchain-based alternatives to traditional financial services that have drawn scrutiny from regulators concerned about consumer protection and financial stability.
Industry analysts project the stablecoin market could reach $2 trillion by 2028, according to Standard Chartered.