Coinbase’s decision to delist certain stablecoins this year could potentially benefit the company’s financial performance, as suggested by an analyst. The cryptocurrency exchange operator announced that it will remove stablecoins in Europe that do not meet the Markets in Crypto-Assets (MiCA) regulation requirements, a prominent European Union crypto law set to be fully implemented on December 30. A Coinbase spokesperson stated to CNBC that, as an industry leader in compliant crypto products and services, the company is committed to maintaining regulatory compliance with MiCA. Further details of their plan will be provided in November, offering options for affected European Economic Area customers to transition to stablecoins issued by authorized issuers, such as USD Coin (USDC) and EUR Coin.
This move presents potential challenges for Tether (USDT), a leading stablecoin that has faced criticism for lack of transparency and alleged misuse by criminals. Despite this, Tether remains the most popular and accessible stablecoin due to its widespread availability across global exchanges over the past decade. USD Coin, issued by Circle, entered the market in 2018. Analyst Owen Lau from Oppenheimer suggested that the delisting might encourage market makers and traders to exchange their Tether for USD Coin, which could be advantageous for Coinbase. Lau noted that Coinbase and Circle have a revenue-sharing agreement, splitting 50% of USDC revenue. Therefore, an increase in USDC’s market capitalization could lead to higher revenue for Coinbase.
Oppenheimer maintains a buy rating on Coinbase with a price target of $282, which is 65% above Friday’s closing price. Although Coinbase’s stock has risen 118% over the past year, it has decreased by 1% in 2024, with further declines possibly ahead, given the struggles in the crypto market and stagnant bitcoin prices. Lau mentioned that MiCA’s implementation positively impacts Coinbase, but near-term challenges include election-related uncertainties and geopolitical tensions. After January 1, 2025, MiCA is expected to be a significant catalyst for Coinbase, potentially enhancing USDC’s market capitalization and, consequently, Coinbase’s revenue.
Stablecoins, which offer a fixed value peg to another asset, are widely regarded as a major application in cryptocurrency. They are predominantly used for trading on centralized and decentralized exchanges and as collateral in decentralized finance (DeFi). Collectively, stablecoin issuers rank as the 18th largest holders of U.S. treasuries, alongside significant sovereign holders. Recently, the market cap for dollar-backed stablecoins has reached all-time highs following a notable decline in 2023. According to CryptoQuant, Tether constitutes over 70% of the market cap of U.S. dollar-backed stablecoins, with USD Coin accounting for approximately 21%.
