Coinbase CEO Brian Armstrong has highlighted the benefits of stablecoins, saying they allow people to hold dollars and other major currencies and send money across the world instantly for less than one cent. However, his comments have also raised concerns about transaction privacy and the ability of centralized companies to freeze users’ funds.
In a November 6 post on X, Armstrong said stablecoins are making it easier and cheaper to move money across borders. His comments focused on the speed and low cost of these payments, but he did not announce any new Coinbase product or changes to transaction fees.
Stablecoins are making global payments easier
Coinbase’s Base network is working to make stablecoin payments available around the clock without depending on traditional banking hours.
The payment system supports different uses, including international payroll, money transfers, merchant payments, and digital accounts where users can hold stablecoin balances.
The process involves adding money through a bank account or card, converting it into stablecoins, sending it through the blockchain, and delivering it to the recipient. Users can then keep the funds or convert them into traditional currency through supported services.
However, the cost of sending stablecoins does not always include conversion and withdrawal fees, which can add to the total expense.
Coinbase has also partnered with Nium to support international stablecoin payments. Announced in April, the partnership allows businesses to send and receive stablecoins and convert them into traditional currencies for payments. Nium said its network serves more than 190 countries.
Privacy concerns grow around stablecoin payments
Not everyone agreed with Armstrong’s positive view. Some users questioned whether stablecoins can truly provide private payments when transactions on public blockchains are visible to everyone.
One user argued that public transaction records can expose wallet balances, payment amounts, and financial relationships between different addresses.
Ethereum’s public blockchain, for example, allows anyone to view transaction activity. Although wallet addresses do not directly reveal someone’s identity, transaction patterns can sometimes help connect wallets to real people.
Companies are now working on ways to improve privacy. In May, Polygon introduced private stablecoin transfers through Hinkal, allowing users to send USDC and USDT without publicly showing the sender, receiver, or transaction amount.
The system also includes transaction screening to support compliance requirements.
Centralized stablecoin companies can freeze funds
Another major concern is the ability of stablecoin issuers to freeze users’ money.
Some critics argue that stablecoins such as USDT are not fully decentralized because their issuers can restrict access to funds.
Tether has a policy allowing it to freeze wallets connected to individuals on U.S. Treasury sanctions lists. The company introduced this policy in December 2023 to strengthen security and support sanctions enforcement.
Circle, the company behind USDC, also has the authority to block certain wallet addresses. Its terms allow restrictions involving suspected illegal activity, violations of its policies, and valid government orders.
These rules mean that users can hold stablecoins in their own wallets but may still face restrictions from the companies that issue them.
Coinbase expands stablecoin payments for businesses
Coinbase is also working to bring stablecoins into everyday payments through its partnership with PPRO, announced on May 27.
The partnership allows eligible merchants to accept stablecoin payments through their existing payment providers. Coinbase said customers could pay using hundreds of supported wallets without paying gas fees, while merchants could receive payments around the clock.
The United States was selected as the initial launch market, with plans to expand into other regions.
Overall, stablecoins offer faster and cheaper international payments, but concerns about privacy, centralized control, and frozen funds remain important challenges as the technology becomes more widely used.