The month of June 2025 has been transformative for Coinbase (COIN), with its stock soaring 43% on news that the U.S. Senate passed the GENIUS Act, a landmark bill regulating stablecoins. While skeptics point to declining trading volumes and heightened competition, a deeper analysis reveals that regulatory clarity and indirect stablecoin revenue streams position Coinbase as an undervalued buy. This article dissects how the GENIUS Act's progress, Coinbase's partnership with Circle (USDC), and underappreciated yield opportunities could fuel sustained growth.
Regulatory Clarity: The Catalyst for Coinbase's Surge
The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), passed by the Senate on June 17 with a 68-30 bipartisan vote, represents a turning point for the crypto industry. By establishing federal oversight for stablecoins—digital currencies pegged to fiat—this legislation removes a major overhang for Coinbase. The bill:
- Legalizes non-bank stablecoin issuance: Allows companies like Circle (operator of USD Coin, or USDC) to continue issuing stablecoins under federal licenses.
- Sets reserve requirements: Mandates 100% backing of stablecoins with high-quality assets, aligning with global standards like the EU's MiCA framework.
- Preempts state-level overregulation: Reduces the risk of conflicting state laws.
For Coinbase, which earns 50-100% of USDC reserve income through its partnership with Circle, the Act's passage eliminates existential uncertainty. The stock's 16% surge on June 18 underscores market recognition of this tailwind.
The Underappreciated Stablecoin Revenue Engine
Coinbase's direct trading revenue has faced headwinds, but its indirect stablecoin revenue streams are quietly growing.
USDC: A Cash-Cow with Global Reach
As the second-largest stablecoin by market cap (now $60 billion), USDC generates consistent income for Coinbase through:
- Reserve interest: Earnings from Treasury bills and commercial paper backing USDC.
- Transaction fees: A percentage on USDC transfers and smart contract interactions.
In Q1 2025, this revenue totaled $298 million**, or **15% of Coinbase's net revenue**—up 51% year-over-year. Analysts project USDC's market cap to hit **$100 billion by 2026.
👉 Why USDC’s growth is a game-changer for crypto investors
Stablecoin Yield Products: The Next Frontier
Coinbase's Coinbase One Card and USDC-integrated Shopify payments create recurring revenue channels. The GENIUS Act’s transparency rules could further boost USDC's institutional adoption.
Why the Stock Is Undervalued Despite Trading Volume Concerns
The market misprices Coinbase’s regulatory and structural advantages:
Global Licensing Wins
Coinbase secured the first U.S.-based MiCA license from Luxembourg, unlocking a 450M+ population market for USDC.
Derivatives Market Expansion
The $2.9B acquisition of **Deribit** positions Coinbase to tap the **$1.5 trillion crypto derivatives market**, reducing reliance on spot trading.
👉 How Coinbase plans to dominate crypto derivatives
Undervalued Relative to Peers
Coinbase's 60x forward P/E compares favorably to fintech peers like PayPal (26x), given its stablecoin-driven recurring revenue.
Risks and the Path Forward
The biggest near-term risk is House delays. However, bipartisan Senate support and White House backing suggest a compromise is likely by early August.
Investment Thesis: Buy the Dip, Own the Regulatory Cycle
Key catalysts:
- House passage by late August.
- USDC's MiCA-compliant EU rollout.
- Deribit's integration.
Recommendation: Establish a position in COIN with a price target of $400 by end-2025.
FAQs
Q: How does the GENIUS Act benefit Coinbase?
A: It legitimizes USDC, ensures federal oversight, and preempts conflicting state laws—boosting investor confidence.
Q: What percentage of Coinbase’s revenue comes from USDC?
A: 15% ($298M in Q1 2025), with 51% YoY growth.
Q: What are the risks to Coinbase’s stock?
A: Legislative delays or a crypto market downturn could cause short-term volatility.
Q: Why is USDC adoption critical for Coinbase?
A: It generates passive income from reserves and transaction fees, diversifying revenue beyond trading.
The regulatory tailwinds are here. The stablecoin opportunity is real. Coinbase is positioned to capitalize on both.