Brian Armstrong Explains Why Traditional Banks Launching Their Own Stablecoins Isn't the Best Path

During the first quarter earnings call, Armstrong was asked about the growing interest of traditional banks in the cryptocurrency industry after regulatory relaxations.

Coinbase Global Inc (NASDAQ:COIN) CEO Brian Armstrong, on Thursday, touched on the wisdom of traditional banks launching their own stablecoins in light of their foray into the cryptocurrency industry.

During the first quarter earnings call, Armstrong was asked about the growing interest of traditional banks in the cryptocurrency industry following the easing of regulatory directives.

The top executive said that Coinbase has been engaging with and forging partnerships with some of these institutions as they navigate the crypto landscape.

Specifically, Armstrong said that some of them are planning to develop their own dollar-pegged stablecoins, an idea with which he disagreed with.

“Our view is that that's not necessarily the best path because we think stablecoins have network effects. You want interoperability with other financial institutions to be able to settle payments and do all kinds of things,” he explained.

Instead of rolling out their own stablecoins, he suggested that banks should partner with existing ones like USD Coin USDC/USD.

It is worth noting that Coinbase has an equity stake in Circle, the issuing company behind USDC. In fact, USDC was launched by Centre, a consortium formed through a joint venture between Circle and Coinbase.

See Also: Bitcoin Breaks $100,000, Ethereum, XRP, Dogecoin Roar 10% Higher

TradFi’s entry into the space has been met with less friction as the barriers have been slowly lowered. Notably, directives preventing them from engaging in crypto custody were repealed after President Donald Trump took over.

This development follows Coinbase’s first-quarter earnings report, where the company missed revenue and EPS expectations.

Before the earnings, Coinbase announced the acquisition of Deribit, a crypto options exchange, for approximately $2.9 billion, marking the firm’s largest push into the global crypto derivatives market.

Shares of Coinbase fell 2.67% in after-hours trading after closing 5.06% higher at $206.50 during Tuesday's regular trading session, according to data from Benzinga Pro.

As of this writing, the stock ranked high on growth, a measure of a stock's combined historical expansion in earnings and revenue across multiple periods. To check how other cryptocurrency-related stocks stack up against COIN, visit Benzinga Edge Stock Rankings.

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This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.