Coinbase Backs Stablecoin ETF as Ethena Partnership Expands

Key Insights

• Coinbase invested in ProShares’ IQMM ETF, which is structured to meet future GENIUS Act reserve requirements.
• Coinbase Ventures also purchased ENA tokens and entered a strategic partnership with Ethena.
• The exchange is expanding its stablecoin infrastructure as U.S. regulation moves closer to implementation.

Coinbase is expanding its stablecoin strategy through new investments in reserve infrastructure and onchain financial products. The crypto exchange announced an investment in the ProShares GENIUS Money Market ETF (IQMM), while also revealing a strategic partnership with Ethena and a purchase of ENA tokens.

The moves come as the U.S. prepares to implement the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, which would require stablecoin issuers to maintain reserves backed by highly liquid assets.

Coinbase Invests in Stablecoin Reserve Infrastructure

According to Coinbase, the investment is part of its core focus of building for the next phase of stablecoins.  The exchange noted that by investing in the ETF, it is supporting a critical stablecoin infrastructure.

While Coinbase does not issue stablecoin, it is a key partner for USDC issuer Circle. The exchange also added that it is building a stack of tools for stablecoins and will support tools that enable stablecoin scaling.

“This investment extends that work into the less visible but critical parts of the system: cash management, reserve operations, and creation and redemption infrastructure,” it said.

The exchange added that reserve infrastructure is crucial for stablecoins, especially as adoption increases. Presently, most of stablecoins flows have depended on banking and cash management rails.

However, the exchange believes bitcoin reserves should extend to other cash or cash-equivalent products, such as ETFs and money market funds. It noted that the GENIUS Act has already set the standards and that it is supporting ProShares in building tools that meet those standards.

The GENIUS Act is not expected to take full effect until at least 2027, as regulators continue to work on its implementation.

Coinbase Partners with Ethena, Invests Through ENA Purchase

Meanwhile, Coinbase appears to be in a deal-making mood, as it has now partnered with the synthetic dollar protocol Ethena. Ethena is the issuer of USDe.

The exchange investment arm, Coinbase Ventures, announced that it also invested in Ethena by purchasing an undisclosed number of ENA tokens on the open market. The announcement added that Ethena will now have a closer partnership with Coinbase and USDC.

Although the post did not explain what the partnership will entail, Ethena stated they will focus on  “growing onchain finance and savings products.”

The protocol founder, Guy Young, also added that an integration is scheduled for next week, making the Ethena products available on Coinbase.

Unsurprisingly, the deals have attracted interest from industry stakeholders. Bitwise ceo Hunter Horsley described the Ethena and Coinbase deal as finance coming onchain.

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