Coinbase's Regulatory Tailwind: Why the Crypto Exchange Could Soar on Bipartisan Momentum

The Senate's June 2025 approval of the GENIUS Act marks a pivotal moment for the crypto industry—and for Coinbase (COIN), which now stands to benefit from a regulatory framework that could unlock billions in institutional capital. This bipartisan legislation, designed to stabilize the $260 billion stablecoin market, positions Coinbase as a key beneficiary of a long-awaited clarity that has eluded digital assets for years. For investors, the question isn't whether crypto regulation is coming—it's whether they're positioned to profit from the shift.

The GENIUS Act: A Game-Changer for Stablecoins—and Coinbase

The GENIUS Act establishes federal oversight for stablecoins like USDC (the second-largest stablecoin, with a $61.4 billion market cap) by requiring 1:1 reserve backing, monthly audits, and CEO/CFO certifications. Smaller issuers ($<10B market cap) can opt for state-level oversight, while larger players transition to federal control under the Treasury. This structure addresses systemic risks, a key concern for regulators, while creating a path for stablecoins to become mainstream payment rails.

For Coinbase, the law is a transformative tailwind. The company owns a 40% stake in Circle (the issuer of USDC), which now gains credibility as a regulated entity. USDC's interest revenue—100% of which flows to Coinbase when held on its platform—is set to grow as institutional adoption accelerates. With stablecoin revenue up 51% YoY in Q1 2025, this segment alone could fuel a valuation rerating.

Why Coinbase Is Undervalued—and Poised to Catch Up

Coinbase's stock surged 16% to $120/share after the Senate vote but still trades at just 10x forward revenue—far below fintech peers like PayPal (25x) and Block (15x). This gap reflects lingering skepticism about crypto's volatility and Coinbase's ability to monetize beyond trading. However, three pillars suggest this discount is unwarranted:

1. Stablecoin dominance: USDC's path to overtaking Tether (USDT) is now clearer, with the GENIUS Act favoring transparent, regulated issuers. Coinbase's direct revenue link to USDC's growth positions it to capture the $2 trillion stablecoin market projected by 2028.
2. Merchant services: The Crypto Card and Amex Coinbase Card (processing $500M in transactions annually) are expanding into payments, a $100B+ opportunity. The upcoming Coinbase One Card (launching Q4 2025 with 4% Bitcoin rewards) could further accelerate adoption.
3. Subscription moats: Services like Coinbase Earn and Pro+ are up 40% YoY, proving recurring revenue resilience even as crypto volatility persists.

COIN's 16% surge post-GENIUS Act approval highlights investor optimism, but the stock remains undervalued relative to its peers.

Catalysts for a 2025 Rebound—and Beyond

The bill's next hurdle is the House, where policymakers must reconcile regulatory oversight (Treasury vs. Federal Reserve/Comptroller). While delays are possible, bipartisan momentum and industry lobbying (including from Coinbase) suggest a 2025 signing is probable. Key near-term catalysts include:
- House passage: A final vote by year-end could solidify USDC's standing as the “gold standard” stablecoin.
- Shopify integration: The e-commerce giant's planned USDC payments feature (launching late 2025) could bring millions of users to Coinbase's platform.
- Institutional inflows: The GENIUS Act's reserve requirements will attract institutional capital, boosting USDC's market share and Coinbase's interest revenue.

Risks, but the Reward Outweighs Them

Bearish arguments center on macroeconomic weakness, crypto volatility, and regulatory overreach. However, the GENIUS Act's focus on stability—reducing systemic risks—should mitigate crypto's price swings, while Coinbase's diversified revenue streams (trading, subscriptions, merchant services) provide a buffer.

A 2025 Target—and a Buy Signal

Analysts project a $180/share target by year-end (15x a conservative $1.2B revenue), implying a 50% upside from current levels. With $2.3B in cash and no debt, Coinbase can weather near-term headwinds while capitalizing on partnerships and product launches. The asymmetric risk-reward profile—limited downside in a regulated environment versus massive upside if institutional adoption takes off—supports a buy recommendation now.

Final Take

The GENIUS Act isn't just a regulatory win—it's a structural shift for crypto, and Coinbase is uniquely positioned to capitalize. For investors, this is a rare opportunity to buy a fintech leader at a discount as it transitions from a speculative crypto platform to a regulated, cash-generating payments giant. The road ahead isn't without bumps, but the bipartisan momentum behind the GENIUS Act suggests the tailwinds are just getting started.

COIN's valuation lags peers, despite its strategic advantages in regulated stablecoins and merchant services.