The recent forecast that Coinbase may see a reduction in its share of USDC-related revenue has sparked concern among some investors. However, analysts at Bernstein suggest this shift isn’t a red flag — it’s actually a bullish signal for both Coinbase and the broader decentralized finance (DeFi) ecosystem. While the crypto exchange’s portion of Circle’s revenue is expected to decline slightly, the underlying driver — increased adoption of USDC beyond centralized platforms — points to long-term growth and diversification.
A Strategic Revenue Shift, Not a Loss
Bernstein analysts project that Coinbase’s share of Circle’s total revenue will drop from 54% to 50% by 2027. On the surface, this may seem like a setback. But the context reveals a more positive narrative: this dip reflects the expanding use of USDC across decentralized platforms, traditional finance, and real-world payment systems.
As USDC adoption grows beyond crypto-native environments, its utility in payments, cross-border transactions, and institutional financial services is expected to rise. Gautam Chhugani and his team at Bernstein argue that this expansion naturally dilutes Coinbase’s proportional revenue share — but simultaneously increases the overall size of the pie.
“The long-term trend shows that as USDC becomes embedded in broader financial infrastructure, its reliance on crypto capital markets will decrease,” the analysts noted in a recent research report. “This shift supports sustainable, diversified growth for all ecosystem participants.”
Stablecoins Surge: The $4 Trillion Opportunity
The stablecoin market has reached a pivotal moment. According to DefiLlama data, the total market cap now exceeds $253 billion. Bernstein forecasts explosive growth over the next decade, projecting the market could expand nearly 1,500% to reach **$4 trillion** by 2035.
Circle and Tether currently dominate the landscape, collectively controlling around 90% of the stablecoin market. Circle’s recent successful IPO has further solidified its position as a trusted, regulated player in digital finance.
Bernstein estimates Circle’s revenue will grow at a compound annual growth rate (CAGR) of 47% through 2027, driven by rising institutional demand, regulatory clarity, and increasing integration into global payment rails.
A key catalyst? The evolving regulatory environment in the U.S., where bipartisan support for stablecoin legislation is gaining momentum. With clearer rules on the horizon, USDC is poised to become a sanctioned component of the American financial system — used not just by crypto traders, but by merchants, banks, and fintech platforms.
The Coinbase-Circle Revenue Model Explained
Coinbase and Circle operate under a strategic revenue-sharing agreement that renews every three years, with the next renegotiation expected in 2026. Bernstein analysts believe this partnership is likely to continue, given its mutual benefits.
Under the current arrangement:
- Coinbase retains 100% of interest income generated from USDC held on its own platform.
- Off-exchange USDC revenue — such as yield from DeFi protocols or lending platforms — is split 50-50 between Coinbase and Circle.
This structure ensures that as USDC usage expands off centralized exchanges and into decentralized ecosystems, Coinbase still captures a significant portion of the value.
In Q1 2025, stablecoin-related activities contributed approximately **$300 million**, or 15%, of Coinbase’s $2 billion in total revenue. This stream helped offset a 20% decline in trading fees, underscoring stablecoins’ growing importance to the exchange’s financial resilience.
With Coinbase holding an estimated 67% share of the U.S. retail and institutional exchange market, it remains a critical distribution channel for USDC — even as alternative platforms gain traction.
Expanding USDC Use Cases: Beyond Trading
Coinbase isn’t passively watching its revenue share shift — it’s actively driving innovation to broaden USDC’s utility.
One major initiative is its USDC payments protocol, integrated with platforms like Stripe and Shopify. Over one million businesses now accept USDC as a payment method, enabling faster, lower-cost transactions across borders.
Additionally, Coinbase has deployed USDC on its own Layer 2 blockchain, Base, which has processed more than $6.8 trillion in USDC transactions in 2025 alone. Base has emerged as a leading Ethereum scaling solution, rivaling Arbitrum in activity and developer engagement.
Coinbase’s strategic acquisitions further demonstrate its commitment to ecosystem expansion. In May 2025, it acquired Deribit, a leading crypto derivatives platform, for $2.9 billion — signaling its intent to dominate not just spot trading, but also advanced financial products.
Challenges and Competition Ahead
Despite these advantages, Coinbase faces growing competition. Circle has partnered with Binance, Coinbase’s largest global rival, allowing Binance to issue and support USDC on its platform. This move diversifies Circle’s distribution but introduces new competitive pressures.
Moreover, DeFi protocols continue to capture market share from centralized exchanges. Platforms like Aave, Curve, and Uniswap enable users to earn yield on USDC without relying on intermediaries — challenging traditional custody models.
Yet Bernstein views this not as a threat, but as validation of a maturing ecosystem. As USDC becomes more decentralized and widely adopted, its resilience and utility increase — benefiting all stakeholders, including Coinbase.
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Frequently Asked Questions
Q: Why is a drop in Coinbase’s USDC revenue share considered positive?
A: Because it reflects wider adoption of USDC outside Coinbase’s platform — particularly in DeFi and traditional finance — which increases total transaction volume and shared off-exchange income.
Q: How does Coinbase still profit if its revenue share decreases?
A: Through its 50-50 split on off-platform USDC yield and full retention of on-platform interest. As total USDC usage grows, even a smaller percentage represents larger absolute gains.
Q: What role does regulation play in USDC’s future?
A: Clear U.S. stablecoin legislation would legitimize USDC as a regulated digital dollar, encouraging adoption by banks, fintechs, and government agencies.
Q: Is USDC safer than other stablecoins?
A: USDC is among the most transparent and regulated stablecoins, with regular audits and full reserve backing in cash and short-term U.S. Treasuries.
Q: How does Base contribute to USDC growth?
A: Base provides a fast, low-cost Ethereum Layer 2 network where developers build apps using USDC, driving transaction volume and user engagement.
Q: Could Coinbase lose relevance as DeFi grows?
A: While DeFi reduces reliance on centralized exchanges, Coinbase’s ecosystem investments — including Base, payments, and Deribit — position it as a bridge between traditional finance and decentralized innovation.
As the line between traditional finance and crypto continues to blur, Coinbase’s evolving role — from exchange to ecosystem builder — ensures it remains central to the future of digital money. The slight dip in revenue share isn’t a retreat; it’s a sign of success in a more open, decentralized financial world.