Coinbase Drops Fees for PYUSD—A Strategic Play or Desperate Grab for Stablecoin Relevance?

Zero-fee trading arrives for PayPal’s stablecoin—just as regulators start circling the $130B sector.

Coinbase’s latest move: Waiving fees on PYUSD trades through 2025. On the surface, it’s a win for users. Scratch deeper, and it reeks of exchange giants jostling for dwindling stablecoin market share.

Wall Street’s playbook: When profits dip, pivot to ’customer-friendly’ gimmicks. Crypto’s twist? Doing it while pretending decentralization was the plan all along.

Driving Stablecoin Utility

In an official blog post released Thursday, Coinbase confirmed its decision to eliminate transaction fees for PayPal USD (PYUSD) transactions on its platform. The initiative is intended to “accelerate the adoption, distribution, and utilization” of PYUSD, a U.S. dollar-pegged stablecoin launched by PayPal and Paxos in 2023. 

Despite PayPal’s prominent global brand, PYUSD has struggled to capture market share, holding less than 1% of the dollar-backed stablecoin market with a capitalization of approximately $730 million. 

By contrast, Tether’s USDT dominates the sector with a 66.5% share, followed by Circle’s USDC at 28.3%, according to data from CryptoQuant.

Through this partnership, both companies are looking to position PYUSD as a viable digital asset for everyday transactions and institutional use cases. A notable feature of the integration will allow users to redeem PYUSD directly into U.S. dollars, further enhancing its transactional utility.

Expanding Payments Infrastructure

For merchants, the integration offers the option to settle transactions directly in PYUSD, bypassing traditional financial intermediaries. 

PayPal’s president and CEO, Alex Chriss, emphasized the broader ambition behind the collaboration, stating, 

“We are excited to drive new, exciting, and innovative use cases together with Coinbase and the entire cryptocurrency community, putting PYUSD at the center and driving further utility and adoption for digital currencies among developers, customers, and other users.”

Stablecoins, which maintain a constant value by pegging to fiat currencies like the U.S. dollar, have seen rapid adoption within crypto trading communities. However, companies like PayPal believe these digital assets can also transform global payments by enabling instant, borderless transactions.

Future Collaborations in DeFi and Beyond

The Coinbase-PayPal alliance extends beyond just fee waivers. According to Jose Fernandez da Ponte, PayPal’s senior vice president of blockchain, crypto, and digital currencies, both firms plan to explore new projects aimed at expanding the use of stablecoins for payments and integrating PYUSD into decentralized finance (DeFi) ecosystems. 

He noted, 

“This combination of being able to connect the consumer bases of PayPal and Coinbase, bringing our merchants to the table, bringing [Coinbase’s] institutional access to the table -- we think that it creates a really, really powerful combination.”

Coinbase, which previously extended zero-fee privileges to Circle’s USDC, is now offering similar incentives to PayPal’s PYUSD in an effort to drive adoption. Lauren Abendschein, Coinbase’s global head of institutional sales, highlighted that the objective of this collaboration is to bring stablecoins into mainstream financial infrastructure, advance their technology, and modernize international payment systems.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice