USDC starts nesting, Coinbase launches customized stablecoin issuance brand service

Author: Lawyer Liu Honglin

If a startup wants to incorporate stablecoins into its product, the current challenge is not the lack of stablecoins available, but rather, with so many stablecoins on the market, which one should I use?

Coinbase's answer is that you don't need to use any of them; I will customize one for you.

On May 20, Coinbase announced the launch of USDF for Flipcash through its Custom Stablecoins platform. Flipcash is an application focused on community currency and social payments, allowing users to create digital currencies with a fixed supply and use them like digital cash. The role of USDF is to provide a relatively stable pricing and settlement unit for these community currencies.

According to Coinbase's introduction, USDF is issued on Solana and is 1:1 backed by USDC. Flipcash does not need to build its own issuance, reserves, on-chain contracts, and user deposit capabilities from scratch, but instead hands over these underlying capabilities to Coinbase.

The value of this news lies in this change.

A few days ago, discussions in the U.S. around the CLARITY Act were still addressing the boundaries of stablecoin yields: Can platforms related to stablecoins pay users yields similar to bank deposit interest? The line that regulators want to draw is clear: stablecoins cannot easily become unlicensed high-yield accounts. The direction Coinbase has provided this time is to make stablecoins a payment and settlement capability that applications can integrate.

The industry significance of this step is that it pushes stablecoins from being "assets that attract user retention on platforms" to "payment components that applications can call upon."

For entrepreneurs, stablecoins do not necessarily have to exist solely as an independent financial product; they can also be hidden behind specific products such as social, gaming, creator economy, and cross-border e-commerce, becoming the underlying tools for pricing, purchasing, and settlement.

This is much more interesting than simply issuing a new coin.

Stablecoins Become Services

Many people may still be stuck in the logic of stablecoins where the issuer earns interest spreads: who issues, how large the scale is, how much trading volume there is, and whether there are yields. But the case of USDF reminds us that the commercial value of stablecoins may not only lie in "issuing an asset," but also in "helping others utilize stablecoin capabilities."

To understand USDF, one must first understand what problem Flipcash aims to solve.

It is not merely a wallet, nor an ordinary trading platform, but hopes to allow users to create community currencies with a fixed supply themselves. For example, a creator, a community, or a small group can create their own digital currency on it, allowing other users to purchase and use it like digital cash.

Looking at specific use cases, the role of USDF becomes clearer. Users create a type of community currency with a fixed supply on Flipcash, which needs to be priced in USDF; other users who want to buy or use this type of community currency also complete the settlement through USDF. Coinbase also mentioned that Flipcash chose it because it needed transparent 1:1 USDC backing, USDC incentives that can change with the circulation scale of USDF, a fiat entry that facilitates user access, and the crypto infrastructure that Coinbase has accumulated over the years.

So why doesn't Flipcash just use USDC?

USDC can certainly serve as an underlying stable asset, but Flipcash clearly wants a settlement unit that is closer to its own product. The name USDF itself is tied to Flipcash, and what users see in the product is the platform's own stablecoin, not an external generic asset. More importantly, Coinbase packages USDF with fiat entry, USDC support, circulation scale incentives, and on-chain operations, providing Flipcash with a complete set of stablecoin capabilities, rather than just putting USDC into the product.

The focus here is not on "Flipcash has issued another coin," but on the need for a stable payment and settlement foundation for community currencies at the application level. USDF plays this foundational role.

The structure of this matter can be viewed as follows: USDF's operational structure in Flipcash

Coinbase's Custom Stablecoins platform addresses exactly these types of issues. According to Coinbase's product description, businesses can create their own branded stablecoins, supported by 1:1 exchange with USDC, with Coinbase handling issuance, reserves, smart contracts, and on-chain operations, and can also integrate with payment, rewards, developer tools, and other scenarios.

Stablecoins are no longer just assets displayed in front of users; they can also be hidden behind products, becoming part of payment, pricing, and settlement.

For businesses, it may not really want to become a stablecoin issuer. What it cares more about is whether its product can have a stable settlement unit, whether users can make payments and exchanges smoothly, whether funds can be reconciled, whether risks can be controlled, and whether the underlying system can operate stably.

These issues are more practical than "issuing another coin" and are closer to the work that stablecoins must face when entering real commercial scenarios.

Coinbase's New Role

If Coinbase is only seen as an exchange, it may be difficult to understand the significance of USDF.

Traditionally, exchanges facilitate trading, list assets, and handle user buying and selling along with transaction fees. However, in the case of USDF, Coinbase's role is no longer just as a trading entry. It resembles a stablecoin infrastructure provider: helping applications issue stablecoins, providing USDC support, connecting fiat entry, maintaining on-chain contracts, and offering enterprise-level technology and compliance capabilities.

One must also consider the position of Circle and USDC. Circle is not the main character in this news, but USDC is the supporting asset behind USDF. In other words, USDF is superficially Flipcash's branded stablecoin, but its underlying stability still relies on USDC.

This is important for USDC. In the past, USDC's typical scenarios included exchange balances, on-chain transfers, DeFi, and institutional settlements. Now, through Coinbase's custom stablecoin platform, USDC can be embedded into more specific applications, becoming the underlying asset behind community currencies, social payments, and platform settlements. What users see may be USDF, but the stability supporting it is still USDC.

From this perspective, the division of labor between Coinbase and Circle becomes clearer. Circle provides the underlying stablecoin asset, while Coinbase packages this capability into a product that enterprises can integrate, which applications then incorporate into their user scenarios. The competition in the stablecoin industry is no longer just about who issues on a larger scale, but also about who can enter more real applications.

This aligns with Coinbase's direction over the past few years. It no longer wants to only stand at the end where users buy and sell crypto assets, but aims to enter deeper positions such as developers, enterprise payments, wallets, and on-chain settlements. USDF is just one specific case among them.

Of course, this path is also heavier.

Once stablecoins enter specific application scenarios, the issues extend beyond just the speed of on-chain transfers; they also include user identity, source of funds, deposits and withdrawals, anti-money laundering, sanctions screening, reserve transparency, redemption mechanisms, accounting, and user complaints. After stablecoins enter real commerce, relying solely on the technical narrative of the crypto world is no longer sufficient.

What Payment Entrepreneurs Should Focus On

For crypto payment entrepreneurs, the most valuable aspect of USDF may not be "Can I also issue my own stablecoin?" A more valuable question is why Flipcash needs Coinbase to help it with this.

The answer is quite practical. Flipcash's core business is community currency and social payments, not stablecoin issuance. It needs stablecoin capabilities to ensure that the community currencies created by users can be priced, purchased, settled, and used. If it were to handle issuance, reserves, on-chain contracts, user deposits, and compliance interfaces itself, the entire product focus would be bogged down by the underlying infrastructure.

This provides a direct insight for crypto payment entrepreneurs: many applications do not need to be issuers themselves; they need to integrate stablecoin capabilities into their business. Whoever can make this integration process smoother may become the infrastructure provider for the next batch of applications.

In the case of USDF, the specific questions and business needs are: How does the platform align the flow of funds for users purchasing community currencies with on-chain settlements? How can users enter through fiat entry? How can the exchange relationship between the branded stablecoin and the underlying USDC be made clear? How can users be informed about who issues this stablecoin, who supports it, and who to turn to in case of issues?

These questions have gone beyond "coin issuance marketing" and have entered the phase where product, payment, and compliance must all be implemented together.

What real customers need is not a concept of a stablecoin that sounds new. They need a system that allows users to make payments smoothly, enables the platform to complete settlements, and clarifies the flow of funds in the backend.

However, we cannot push the idea to the other extreme, suggesting that any company in the future can issue its own branded stablecoin.

After all, once a product involves real fund exchanges, user balances, redemption arrangements, and transferable assets, it will naturally come under financial regulation. Even if it is packaged as community currency, branded coins, or in-app dollar accounts, regulators will still look at where the funds come from, why users buy, what the platform has promised, whether the assets can circulate, and who bears the risks.

Coinbase can do this because it has already accumulated within the U.S. crypto infrastructure and compliance system, and can integrate USDC, fiat entry, on-chain operations, and enterprise services.

If ordinary entrepreneurial teams only see "every application can have its own stablecoin," it is easy to misinterpret and take the wrong path.