Citi (NYSE:C) and Coinbase (NASDAQ:COIN) are partnering on digital assets, with one of the world’s largest banks choosing Coinbase to provide its technology for stablecoins as the world shifts from analog finance to digital.
WSJ.com first reported that Coinbase will provide stablecoins payment rails that support the conversion of fiat to digital currency and vice versa. The new feature will be made available to both institutions and consumers.
Interestingly, Citi is expected to hold digital dollars that can earn a “reward” with an APY of 3.75%. The issue of stablecoins generating yield has been contentious between traditional banks and more innovative digital firms, driven by hyped fears that consumers will move funds from low- to negative-return bank accounts to more agile savings providers, allowing stablecoin holders to earn better returns on parked funds.
It was also reported that Citi was expanding its existing blockchain services, including tokenization, from its current seven jurisdictions, which include the US.
Stablecoin usage, or payment stablecoins as defined by the GENIUS Act, which is law that provides regulatory certainty for digital currency, has been on the rise. While the stablecoin supply has remained fairly stable at around $320 billion, stablecoin activity in payments and transfers has jumped by an estimated 42% to 63% since January 1st. Chainalysis estimates that cross-border flows are up 78% over the past 12 months ending in June 2026.
While stablecoins are often lumped alongside crypto and other digital assets, they are more of an update to established payment rails. Stablecoins tout their ability to move value immediately and at a lower cost than traditional operations, all in a highly secure ecosystem. The GENIUS Act requires payment stablecoin issuers to hold 1-to-1 reserves, typically meaning cash and U.S. Treasuries. Insiders predict that the rise of stablecoins will boost the sale of US Treasuries while solidifying the dollar’s importance as the world’s number one currency. Both of these are good for the US economy.
While traditional banking has fought back on stablecoin yield using FUD that lending will collapse due to a lack of deposit-driven loans, some insiders view the claims by establishment banks as a delay tactic, simply leveraging their exceptional lobbying skills to provide more time for the banking industry to provide the service directly, thus mitigating near-term competition.
The WSJ.com article quotes Brett Tejpaul, head of Coinbase Institutional, declaring that the collaboration will enable faster, cheaper, better payments globally while accelerating the full potential of stablecoins.
