Coinbase has created a system to send remittances with XRP and USDC, dispensing with BTC

Last April 2nd the crypto asset exchange house, Coinbase, announced the creation of a strange remittances service. They say that this exchange platform would allow using XRP or USDC, the crypto asset linked to the dollar created by Circle, to send cross-border remittances “without commissions,” as long as the recipient of the funds also uses an account within them.

The company affirms that this new service allows performing these operations much faster than through the traditional system, but also more efficiently than with other cryptocurrencies, due to the transaction confirmation speed and its cheap commissions.

Alternative to Bitcoin

Coinbase is not really innovating with this new service, since cross-border payments with a global reach and resistant to censorship can be done with bitcoins, but without third parties, like in this case. Bitcoin has already been taken advantage of to send remittances for years, providing an expeditious vehicle for such an end.

Considering this, it is relevant to ask the reason for choosing XRP and USDC above BTC. Maybe there are other interests beyond offering a faster and cheaper service, such as they assert when they propose those cryptocurrencies but not others.

Besides, at the moment of doing this kind of operations, it is important to decide between the speed and the irreversibility of the transactions. People may wonder why they must choose using a centralized service for sending remittances using tools designed to prescind third parties, which is supposed to be the purpose of these crypto assets.

These services “without commissions” only work with users of the platform, and the main incentive is that recipients can obtain their funds directly in fiduciary money. These crypto assets are hard to settle, and so Coinbase becomes an essential (and centralized) actor within the remittances system. In order to benefit users, they should choose an option with great liquidity like BTC, which can be exchanged even in P2P portals.

“Convenience” of the New Coinbase Service

USDC is a crypto asset linked to the dollar created by Circle, a company ally of Coinbase, a reason why the company offers this currency as a competitive option. If the idea is to avoid the volatility associated with BTC, it would be better to use crypto assets linked to a longer-term trajectory within the ecosystem. Beyond the company’s commercial interest, the real competitive advantage of their offer of USDC for sending remittances is not clear.

XRP and USDC can be the most adequate for smaller international money transferences, due to their faster processing and smaller transaction tariffs. USDC also has the additional advantage of being exchangeable for a US dollar, instead of being volatile regarding the price, like other cryptocurrencies.


Besides, the company repeatedly suggests the “advantages” of using its services, that is, that beyond the potentialities of the cryptocurrencies themselves it is their structure which provides true value to users, which might be a marketing strategy.

USDC works as a token on the Ethereum network, so mobilizing funds in this crypto asset is not really cheap (users must pay for moving the token and gas of the transaction in Ethereum). Consequently, the “zero-commissions” service will eventually have to change its model to be profitable.

XRP, the cryptocurrency that focuses on the customer with a corporate and bank profile, had been practically ignored by this exchange house until very recently. However, all its potentialities as a crypto asset suddenly become outstanding, even over other options.

The competitiveness of these crypto assets in front of traditional instruments for sending remittances may be certain, but suggesting that these are the best options of the crypto asset market is only based on the little clear criteria of Coinbase.

Given the functionality of this remittances service, customers are little affected if the cryptocurrency uses the exchange house in this system, since these operations are settled in fiduciary currency. Therefore, crypto assets should be chosen for the customer’ own convenience and willingness.

Payments with Bitcoin payments can be sent globally, without depending on third parties (such as with Coinbase). As this is the crypto asset with the highest liquidity, users can receive their funds in BTC and settle them in several exchange houses or P2P exchange platforms. Customers are advised to choose tools for centralizing rather than decentralizing value exchange through centralized services like that of the American company.

By Willmen Blanco


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