A New Protocol Paves the Way for AI and Crypto to Transact as One

Coinbase CEO Brian Armstrong has praised Google’s latest development in the stablecoin payment infrastructure, calling it “really cool.” Google recently announced the launch of the Agent Payments Protocol (AP2), an open-source protocol designed to facilitate secure and standardized financial transactions between AI agents and merchants. The protocol builds upon two earlier frameworks: the Agent2Agent (A2A) protocol and the Machine-Readable Contract (MCP) protocol, which were introduced to enhance inter-agent communication and system integration.

AP2 is engineered to address key challenges in AI-driven commerce, including authentication, verification, and accountability in automated transactions. The protocol introduces a system of digital mandates—secure, tamper-proof, and encrypted agreements—that serve as proof of user intent and authorization. These mandates are used to confirm both real-time and pre-approved transactions initiated by AI agents, such as purchasing items or booking services.

One of the most notable aspects of AP2 is its support for multiple payment methods, including traditional credit and debit cards, real-time bank transfers, and stablecoins—cryptocurrencies pegged to fiat currencies like the U.S. dollar. Google collaborated closely with Coinbase to ensure seamless integration of stablecoin transactions within the protocol. This partnership is particularly significant given Coinbase’s expertise in crypto-native payments and AI infrastructure, as well as its ongoing development of its own AI and crypto payment systems.

The initiative has attracted broad industry support, with over 60 institutions joining the AP2 ecosystem. These include major financial services providers like American Express, PayPal, JCB, and Worldpay, as well as fintech and AI innovators such as Salesforce, Etsy, and Intuit. In the crypto space, the Ethereum Foundation, Mysten Labs, and Eigen Labs have all contributed to the development and adoption of the protocol. Notably, Ethereum-based stablecoins such as USDC are expected to benefit as the protocol gains traction, with Ethereum potentially serving as a foundational settlement layer for AI-driven transactions.

Google has also introduced a blockchain-specific extension to its Agent2Agent protocol, known as x402, which supports crypto-native operations. This extension aligns with Ethereum’s ongoing efforts to standardize AI agent interactions on the network through the proposed ERC-8004 framework. The Ethereum Foundation has emphasized that the x402 extension enhances the developer experience and opens new opportunities for AI agents operating on crypto rails.

Erik Reppel, head of engineering at Coinbase’s developer platform, highlighted the importance of such collaborations in advancing the future of machine-to-machine commerce. “We’re all working to figure out how AI can transmit value,” he stated, underscoring the growing synergy between AI and blockchain technologies in the financial sector.