Citi and Coinbase Expand Partnership to Link Stablecoins with Virtual Accounts and Merchant Payments

On September 28 local time, U.S. bank Citi and crypto-asset exchange Coinbase announced an expansion of their payments partnership connecting fiat currency and stablecoins. The collaboration centers on Coinbase virtual accounts that use Citi's banking infrastructure and Citi merchant-payment services that use Coinbase technology.

Coinbase Virtual Accounts use Citi's Virtual Account Wallet to receive, hold, and disburse funds, while automatically converting incoming fiat currency into stablecoins. The virtual-account deposit feature is currently in a private pilot and requires account-specific approval from Coinbase.

For merchant payments, Coinbase Payments will be integrated with Citi's payments service, Spring by Citi. When a customer pays with stablecoins, Coinbase automatically converts them into fiat currency and Citi settles the amount owed to the merchant. Merchants can add the payment option without directly holding or managing stablecoins.

The companies said they plan to make the services available in the United States first. The joint announcement did not provide specific launch dates or fees for the individual services.

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As stablecoin ownership grows, their usefulness remains limited if too few merchants accept them. This partnership would let merchants continue receiving fiat currency while also serving customers who pay with stablecoins. The structure gives Coinbase a chance to expand its payments business through Citi's corporate client network, while giving Citi a way to offer existing merchants a new payment method.

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