Sumit Roy
2 min read
In This Article:
Shares of crypto giant Coinbase Global Inc. (COIN) soared to their highest level ever on Wednesday, breaking above $369 intraday and surpassing the previous all-time closing high of $357.39 set in November 2021. The rally comes amid investor mania over stablecoins.
Last week, the U.S. Senate passed the GENIUS Act, a landmark bill that legitimizes stablecoins and provides a regulatory framework for their issuance.
Much of the excitement in recent weeks has centered on Circle Internet Group (CRCL), the issuer of USDC, the second-most-popular stablecoin after Tether. Circle’s shares surged nearly 10-fold in the two weeks following its IPO.
At first, investors appeared to focus solely on Circle, overlooking Coinbase’s crucial role in the USDC ecosystem. But sentiment has quickly shifted. While Circle’s stock has cooled off in recent days, Coinbase has taken the lead.
What many investors are now realizing is that Coinbase is a big beneficiary of USDC’s growth. The company has a collaboration agreement with Circle that entitles it to a significant share of the income generated by reserves backing the stablecoin.
Specifically, Coinbase receives around half of the income generated from the reserves. The more USDC grows in circulation, the more Coinbase stands to benefit.
Beyond stablecoins, Coinbase continues to play a dominant role as a crypto exchange, institutional custodian and infrastructure provider. It also operates Base, a growing Layer 2 network built on Ethereum that aims to make on-chain activity faster and cheaper.
Currently, 235 U.S.-listed ETFs hold Coinbase stock, according to FactSet data. It features double-digit weightings in several crypto-focused funds, including the Global X Blockchain ETF (BKCH), the iShares Blockchain and Tech ETF (IBLC) and the Bitwise Crypto Industry Innovators ETF (BITQ).
As stablecoins continue to gain traction, Coinbase—and the ETFs the hold it—stand to benefit.
