Stripe and Coinbase Integrate Crypto Services

Coinbase and Stripe have recently announced a partnership to promote the global adoption of cryptocurrencies. This collaboration aims to enhance the financial infrastructure by making crypto transactions faster and more affordable. Read more about the partnership in Coinbase + Stripe team up to expand global adoption of crypto

Key Points of the Partnership:

1. Integration of Technologies

1. Stripe will integrate support for USDC (a type of stablecoin) on Base, which is a network that facilitates fast and low-cost transactions.
2. Coinbase will include Stripe’s fiat-to-crypto onramp in its wallet, making it easier for users to exchange traditional currencies (like dollars) for cryptocurrencies

2. Global Reach and Accessibility

1. Stripe operates in over 150 countries, which will help in spreading the use of cryptocurrencies to more regions, including those with limited access to traditional banking systems.
2. This partnership aims to make cryptocurrencies more accessible to everyday people and businesses, potentially expanding the market and user base for digital currencies.

3. Benefits to Users and Businesses

1. The collaboration promises faster and cheaper transactions, which is a significant improvement over many existing payment methods.
2. Businesses can expect improved efficiency and customer satisfaction due to the streamlined payment processes enabled by this partnership.

4. Market Impact

1. The announcement has been well-received in the market, with analysts suggesting it could enhance the credibility and utility of cryptocurrencies globally.
2. The partnership is seen as timely, given the growing interest and demand for digital currencies.

5. Background

1. Stripe previously stopped its crypto operations in 2018 but is now re-entering the market, driven by increased demand and the proven utility of cryptocurrencies.
2. Coinbase continues to innovate and expand its offerings to stay ahead in the competitive crypto market.

Insights from Treasury Experts

We thought it would be valuable to get perspectives from Treasury professionals, Alex Ilkun and Patrick Kunz, who are also Treasury masterminds board member

Q: Do you see the partnership between Coinbase and Stripe to facilitate the increased demand for crypto payment in Corporate Treasury? If consumers are using crypto payments more should companies look to adopt it more?

Alex Ilkun provided several insightful comments regarding the recent partnership between Coinbase and Stripe, focusing on the global adoption of cryptocurrencies. His views are captured below:

1. Benefits to Users and Businesses:
I don’t quite see the speed of payments to typically be an issue in the corporate world, save for, possibly, M&A transactions, but it would be quite a niche and an infrequent use case for most companies. What could be a use case for corporates is the ability to make payments without being subject to cut-off times. However, it would require a significant penetration for that to happen since the parties will need to send and receive the funds, and I have doubts that penetration will occur.

2. Background and Concerns:
My biggest concern about cryptocurrency usage by corporates is their seemingly widespread malicious use. Due to the anonymity it offers, cryptocurrency is enabling black market participation and sanction circumvention. The ease with which significant amounts can be transferred is not comparable with the logistics associated with suitcases of cash. As a corporate, it is a reputational matter to be involved in this structure.

Blockchain technology boasts the ability to trace all the history of transactions, allowing you to see each unit of cryptocurrency travel between wallets. It’s easy to imagine a situation where a wallet is exposed to be criminal, making all the currency units that traveled through it tainted. Could a corporate that used one of those currency units be exposed to claims of engaging in criminal activity regardless of how remote? I’d claim yes as it would make a great story that would go viral.

Now imagine a criminal network on purpose engaging with reputable companies to establish their wallet numbers? That would make a perfect recipe for a new era of digital crime.

3. Final Argument Against Cryptocurrency Use:
My final argument against the use of cryptocurrency is that the currency should be a REASONABLE store of value. There are cryptocurrencies that are pegged to fiat, but it automatically reduces the range of currencies that can be used. Corporate Treasury will not hold significant amounts of funds in crypto as their value will change significantly in reporting currency. Therefore, at worst fiat will need to be exchanged to crypto for each sizeable settlement which is hardly efficient.”

Patrick Kunz, CEO and Founder of Pecunia BV Treasury and Finance, Comments

I would like to see Crypto as a payment type, not looking at it from an investment class perspective, so the risk is like just another foreign currency.

The crypto can be used to send payments around quickly but there are some issues:
(1) The transactions costs are not always clear up front. For some crypto your transaction costs are a factor on time and speed of the transaction
(2) The transaction speed is not known up front
(3) At the receiving end the crypto still bears price risk (i.e. like it is a foreign currency).
(4) The anonymity of the receiver wallet could make it difficult to make sure there is no fraud involved.

This doesn’t mean corporates shouldn’t look into it. To convert all their payments to crypto payments just for speed or transaction costs doesn’t make sense; we just have good alternatives for it. However, on the acceptance side I think corporates should not ignore it. If their market/customers would like to buy your goods with crypto a company should consider it. Stripe does offer the (immediate) exchange into fiat currency so quickly eliminating the price risk of crypto. A slight issue may incur if you have to do refunds in the same currency and buy back the crypto, but in a way this is also the case with FX risk. With the help of the PSP the hurdle to accept crypto as a payment type has decreased, using crypto also for pay outs and payments is another hurdle to take.

Conclusion

Overall, this collaboration between Coinbase and Stripe is a strategic move to leverage their respective strengths and drive the mainstream adoption of cryptocurrencies, making digital finance more inclusive and efficient for users worldwide.

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