The Zhitong Finance App notes that Coinbase (COIN.US), the largest cryptocurrency exchange in the US, is increasing its investment in the digital payments sector, hoping to make more acquisitions and generate more revenue from this business line.

Coinbase's vice president of corporate and business development, Shan Aggarwal said the company acquired the team at payments startup Utopia Labs this month and may acquire more payments-related businesses to expand its capabilities. Aggarwal said in an interview that the company is also considering charging fees for certain payment services in Coinbase Wallet, such as subscriptions for certain features.

Coinbase has made significant inroads into the payments sector over the past year or so, believing that by relying on stablecoins for cheap and almost instant global payments, it can provide more features than competitors such as Block's Cash App and Strike, as well as traditional remittance services.

Today, when most people send money from the US to Africa and many other destinations, traditional bank transfers still take a few days and can cost as much as 15% of the amount paid, Aggarwal said. Payments using stablecoins (cryptocurrencies designed to track dollars or other traditional assets) cost less than a cent and take less than a second to complete.

“I don't think the consumer experience is good in traditional payment companies operating globally,” Aggarwal said. “We're going to redouble our efforts to create a first-class user experience; what we really want to do is update the financial system.”

To achieve this goal, Coinbase launched the Base blockchain in August 2023, which can be used to enable such cheap and fast payments. The company is also partnering with big companies like PayPal to try to pay invoices through its Coinbase Prime product.

For consumers, Coinbase has been developing a universal app that allows users to trade and hold cryptocurrencies, and make payments. Payments are an important part of promoting the Coinbase Wallet app. If successful, corporate and consumer payments could account for 10% of Coinbase's revenue over five years, according to Oppenheimer analyst Owen Lau. Coinbase sees this as a potentially greater opportunity.

Coinbase CEO Brian Armstrong said during the company's last earnings call: “Payments are on the cusp of the cryptocurrency space. We really want 20% of global GDP to run on cryptocurrencies. We believe cryptocurrencies are faster, cheaper, more global, fairer, and freer. Payments will go the path of least resistance, just like water.”

The market's interest in stablecoins has been growing in recent months. Under the leadership of President-elect Trump and the Republican Congress, the US is expected to finally clarify regulations on stablecoins. Europe has provided this regulatory clarity, driving the use of stablecoins. Many companies, including Revolut and Robinhood Markets, are considering issuing their own stablecoins, and they are betting that stricter regulations in Europe and elsewhere will ultimately weaken Tether Holdings' control over this rapidly expanding industry, which has now reached a market capitalization of $193 billion, according to CoinMarketCap.

Coinbase doesn't currently have plans to launch its own stablecoin, but “this is always a possibility,” Aggarwal said.

Coinbase already profits from payments in two ways: it earns so-called serial fees from transactions on Base. According to the company's shareholder letter, Base and payment-related consumer revenue were included in “other transaction income,” totaling $34 million in the third quarter. According to its shareholder letter, it also shared revenue from the company's stablecoin USDC with USDC issuer Circle Internet Financial Ltd. The third-quarter stablecoin revenue was $0.2469 billion.

Payments are part of Coinbase's efforts to diversify its business, aiming to move away from heavy reliance on cryptocurrency transaction fees to other services, particularly those with regular subscription configurations. Coinbase is one of the biggest beneficiaries of the current market boom, with Bitcoin hitting a record high of over $98,300 on Thursday. According to the data, the company's revenue is expected to nearly double year-over-year by 2024.