- Coinbase says a new PayPal deal won't impact its relationship with Circle.
- Competition in the stablecoin sector is fierce.
Coinbase waved away concerns about mounting rivalries in the growing stablecoin space on Thursday after expanding its partnership with crypto-curious fintech PayPal.
The tie up, which makes PayPal the latest stablecoin issuer to ink a deal with the US-based exchange, comes with a coveted boon.
Coinbase users can convert their holdings between PayPal’s PYUSD stablecoin and dollars one-to-one with zero-fees.
Until now, Circle’s USDC was the only stablecoin to benefit from such a deal.
“This does not change our existing relationship with Circle – instead it pushes the entire stablecoin ecosystem forward,” a Coinbase spokesperson told DL News.
“We’re committed to accelerating global adoption of stablecoin payments, and our partnerships with both Circle and PayPal are key to making that happen.”
Coinbase suggests there’s room for everyone. Indeed, the stablecoin market is booming, hitting an all-time high of $237 billion this month.
But competition is fierce.
Giving users the ability to swap from dollars into a stablecoin without having to pay fees removes a big hurdle. Other stablecoins on Coinbase, like Tether’s USDT, don’t benefit from fee-less dollar conversions.
Coinbase says it also aims to leverage its infrastructure to expand support for stablecoins to PayPal’s merchant partners, and will explore new use cases onchain utilising PYUSD.
Excited to work more together @acce 🤝! https://t.co/Kkzfqm4d8D
— Brian Armstrong (@brian_armstrong) April 25, 2025
Coinbase has held a minority stake in Circle since August 2023.
Stablecoin land grab
PayPal launched its PYUSD stablecoin in 2023.
Since then, it’s tried many ways to boost adoption. It experimented with so-called DeFi bribes on decentralised exchanges like Curve, and gave out lucrative incentives to PYUSD users on Solana lending protocol Kamino.
On Wednesday, PayPal announced that customers who hold PYUSD on its app or Venmo can earn 3.7% annually.
These initiatives have found moderate success. PYUSD is now the ninth-biggest stablecoin with $888 million in circulation.
But that’s still far below industry titans Tether and Circle, which have $146 billion and $62 billion in circulation respectively.
The Coinbase deal is significant because it’s PayPal’s first major partnership with a centralised crypto exchange, where the majority of crypto trading happens.
Circle’s new network
On April 21, Circle announced plans to build Circle Payments Network, an in-house service using its USDC stablecoin designed for invoice payments, remittances, treasury services, and payroll and contractor payouts.
It’s bad news for Circle’s partners and those who build similar apps using USDC, Zaheer Ebtikar, founder of crypto hedge fund Split Capital, said on X.
“Building in the stablecoin space will get materially more competitive if the issuer is entering the capture zone and not evangelising darling projects,” he said.
Such a strategy could sideline exchanges and DeFi apps that have already built similar payments products around USDC.
Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.
