In the Crypto market of June, the hottest trend was not Bitcoin, nor altcoins or memes, but Circle (CRCL). Since its IPO, it has surged over 7x, breaking out globally and becoming a rare "Crypto-Stock Leader" in the US stock market. However, as the hot money from traditional finance and the cryptocurrency market flowed into Circle, Cathie Wood, well-known for her tech growth bets, chose to go against the tide by reducing CRCL holdings and increasing Coinbase (COIN) positions.

According to Ark Invest Daily data, Cathie Wood's ARK Invest reduced 415,844 shares of CRCL on June 23, with a total value of approximately $109.5 million at the day's closing price. At the same time, they added 20,701 shares of Coinbase, now worth about $7.14 million. Additionally, they increased their position in Shopify, a deep partner of Coinbase, on the 23rd and 24th by buying a total of 146,487 shares, now valued around $16.76 million.

Ark Invest's current investment in Coinbase is close to $900 million, and their investment in Shopify is around $500 million. Together, these two positions account for approximately 12% of ARK's portfolio weight.

ARK's buy/sell list on June 23, Source: Ark Invest Daily

While the surge of CRCL reflects a long-term optimism for stablecoin payment solutions, Coinbase, as the intersection point of its underlying settlement ecosystem, on-chain network, and user traffic, seems to be closer to the essence of this narrative. Moreover, Coinbase is also one of Circle's largest shareholders, holding around 50% of the equity. With all these "advantages" combined, could Coinbase's value be underestimated?

Comparison of the surge in CRCL (top) and COIN (bottom)

Partnering with 200 Financial Institutions?

On June 24, during the semiannual monetary policy report hearing of the U.S. House Financial Services Committee, the Federal Reserve finally opened up, with Chair Powell stating, "Banks can provide banking services to the cryptocurrency industry and engage in related activities, provided they ensure the safety and soundness of the financial system."

Then, on the following day, the 25th, Coinbase's co-founder and CEO, Brian Armstrong, released Coinbase's new infrastructure Crypto-as-a-Service, CaaS, stating that they have already partnered with approximately 200 global banks, brokerages, fintech firms, and payment institutions.

This CaaS system covers the complete process from asset custody, trading, lending, stablecoin integration to on-chain tokenization. For banks, Coinbase provides a regulatory compliant, scalable, and flexible wallet system and asset management tools. Its custody solution features institutional-grade security with insurance and supports self-managed private keys.
On the trading front, Coinbase supports access to CFTC-regulated crypto perpetual contracts, assisting banks in building compliant spot and derivative businesses. More importantly, Coinbase offers non-pre-funded trade financing capabilities and provides end-to-end services on stablecoin usage, from payments to forex settlement to on-chain issuance, achieving full-cycle integration.

For brokerage firms and exchanges, Coinbase also offers institutional-grade custody services and one-stop trade execution capability, allowing partners to access cross-platform liquidity through Coinbase Prime and providing real-time quote services and RFQ trading. It also supports trade financing, stablecoin integration, and staking infrastructure, with a white-glove service desk tailored for high net worth and complex orders.

Base Chain and USDC, Coinbase's Right Hand

Earlier this month, on June 13th, Coinbase announced several positive developments. Firstly, it announced a partnership with Shopify to support Base Chain-based USDC payments in over 30 countries globally, marking the first true integration of stablecoin settlement in a mainstream e-commerce platform. Simultaneously, Coinbase officially integrated the DEX route on Base into the main application, allowing users to complete on-chain transactions without leaving their CEX accounts.

Currently, Coinbase is one of Circle's largest shareholders, holding nearly 50% of its equity and is also the exclusive issuance partner for USDC. Coinbase is standardizing the use of USDC, aiming to make it a settlement tool for cross-border and local payments. Through real-time settlement, float management tools, and fiat onramps, Coinbase is helping traditional payment institutions upgrade to the next-generation platforms that support crypto payments. Particularly noteworthy is that Coinbase's integration with USDC goes beyond just the asset level and has partnered with top e-commerce platforms like Shopify, significantly driving the adoption of USDC in the real-world e-commerce ecosystem.

The foundation of all the above layouts is Coinbase's Ethereum Layer2 underlying chain Base. Coinbase has taken multiple initiatives to encourage customers to tokenize assets and deploy them on Base for DeFi applications, backed by a compliant exchange, low fees, and support for fast 24/7 settlement, providing an ideal environment for traditional institutions to explore on-chain businesses. With USDC accounting for 90% of the stablecoin supply on Base, as the Base chain becomes more active, CIRCLE's adoption will become widespread.

Stablecoin dominance on Base, over 90% USDC, Source: DUNE

As Coinbase is integrating on-chain liquidity, compliant payments, and high-frequency trading into a complete ecosystem and combining them in a "regulatory-permissioned" manner, the current Coinbase may not just be a compliant exchange or ETF target; it is building an operating system with CaaS and Base that is gradually being adopted by mainstream finance.

Deribit + CFTC Perpetual License, the Compliance of "Derivatives" with Big Spending

Due to the high cost of compliance, the decline in transaction fees and institutional business in the last quarter has become a fact for Coinbase with a restricted revenue model. However, derivatives, particularly "legitimate U.S. market perpetual contracts," are an incremental market that has not been fully tapped into.

Therefore, Coinbase has taken a series of measures, the most important of which was its announcement in June to launch within the year a 24/7 perpetual futures contract feature in the U.S. that complies with the Commodity Futures Trading Commission (CFTC) requirements. Earlier on May 9, Coinbase had preliminarily launched Bitcoin and Ethereum futures trading in the U.S. through its CFTC-regulated exchange Coinbase Derivatives, LLC (formerly known as the CFTC-regulated derivatives platform FairX). Also, in May, Coinbase completed the acquisition of Deribit, one of the world's largest cryptocurrency options exchanges, joining the ranks of the top derivative markets.

Deribit has a strong influence in non-U.S. markets, especially in Asia and Europe. The acquisition has secured Deribit's leading position in Bitcoin and Ethereum options trading, accounting for approximately 80% of global options trading volume, with daily trading volume exceeding $2 billion. Additionally, 80-90% of Deribit's customer base comprises institutional investors, and its professionalism and liquidity in the Bitcoin and Ethereum options markets are highly favored by institutions. Coinbase's compliance advantage, combined with its already robust institutional ecosystem, makes it even more adaptable.

In the United States, after a compliance cleanup a few years ago, there was a long period without exchanges launching compliant derivatives. The U.S. market has always been a "hot cake" in the eyes of exchanges. However, for U.S. players, CME only caters to institutions, Binance cannot be compliant, and on-chain protocols like Hyperliquid, which took around 20% of Binance's derivative market share, have been the primary choice for most U.S. traders as they can bypass regulations. However, this market may also be "swallowed up" by Coinbase. As the only U.S. platform that has both user base, regulatory compliance, and technological stack, it has become the exclusive channel for truly "legally opening futures trading" in the U.S. market.

This series of actions is a response to its decline in the previous quarter's financial report. In the last quarter, its earnings per share (EPS), revenue, and platform trading volume all collectively declined. Compared to spot trading, which is more affected by the market, futures trading is a more "stable" source of income.

The Value of Coinbase Lies Not in the Current Price, but in its Structure

Although Coinbase only receives a small part of the interest income from USDC (about 34%), its on-chain settlement, payment gateway, and DEX routing covering the economic landscape are more extensive than CRCL. ARK's rebalancing behavior also confirms this logic. Selling off CRCL is for profit-taking, while increasing exposure to targets in the Coinbase ecosystem is a bet on its on-chain ecosystem integration capability. Coinbase also recently announced its next phase goal of "focusing on driving mainstream adoption of cryptocurrency" and dividing its development into three stages.

The first stage is to view cryptocurrency as a new investment platform, starting with Bitcoin and gradually expanding the asset list.

The second stage involves a complete overhaul of existing financial services, no longer just replacing old systems with new interfaces, but rebuilding a new financial system from the ground up with cryptocurrency as its core. This includes DeFi lending backed by Bitcoin and cross-border payment services based on stablecoins, emphasizing users' freedom and power to control their assets.

In the third stage, Coinbase aims to evolve the platform into the infrastructure for the next generation of Internet applications, enabling value to flow "directly" to true creators and users.

When Base handles traffic entry, DEX provides asset movement, USDC binds payment scenarios, perpetual contracts catch high-frequency trading, Coinbase's shape has transcended that of an exchange itself; it now resembles more of a "compliant on-chain App Store."

Value discovery often comes not from being cheap, but from having the right structure. And Coinbase may just be that asset with the right structure.

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