Citi and Coinbase have expanded their payments collaboration so that businesses using Coinbase’s payment rails get bank-account-style fiat wallets that auto-convert incoming cash into stablecoins, while Citi’s merchant clients can accept stablecoins at checkout and settle as bank of record. The two firms announced the deepened partnership this week, moving a relationship that started in late 2025 into product territory.
The first building block is Coinbase Virtual Accounts, powered by Citi’s Virtual Account Wallet through a banking-as-a-service arrangement. Incoming fiat is automatically converted into US dollar stablecoins held at Coinbase. Those balances currently earn a 3.75 percent annual reward, per Cryptobriefing’s reporting on the arrangement. Coinbase describes the auto-conversion as an industry first for fiat wallets tied to payments.
Merchant acceptance, without custody
On the other side, Citi is switching on merchant stablecoin acceptance through Spring by Citi, its payment acceptance platform for acquiring, gateway and settlement. When a shopper pays in stablecoin, Coinbase Payments handles the rails and automatically converts the digital currency into fiat, and Citi settles the proceeds as the bank of record. The merchant never holds, custodies or manages digital assets directly.
Citi says the setup lets merchants serve more than 150 million stablecoin holders globally through checkout flows that look like any other card or account payment. Shahmir Khaliq, who leads Citi Services, framed the partnership as a way to give clients regulated exposure to the digital economy without asking them to build a parallel system.
“Clients building on Coinbase have always needed a fast, compliant bridge between fiat and stablecoins, and Citi gives us that at scale,” said Alec Lovett, Head of Infrastructure Product, Coinbase.
Brett Tejpaul, Head of Coinbase Institutional, called Citi the kind of regulated banking partner the digital asset economy needed to move from experiments to everyday commerce. Both quotes matter less for what they say than for who is saying them: this is a money-center bank putting its charter, not just its API, behind stablecoin settlement.
Why the timing is tight
The expansion lands in the middle of a US regulatory build-out that will decide who can do exactly this kind of business. Treasury published the first binding GENIUS Act rule on September 30, establishing certification procedures for state-supervised stablecoin issuers and drawing a $10 billion line between state and federal oversight. The Fed has a proposed rule guaranteeing two-business-day stablecoin redemptions in play. Comments on separate Treasury issuance rules close October 19.
For Citi, settling stablecoin conversion as bank of record is only safe if the tokens themselves meet a reserve and licensing standard. GENIUS gives them that standard, which is one reason banks that sat out the 2021-2024 cycle are building payment products now.
Where the volume is
The card side of the market offers the clearest uptake signal. Visa reported this week that 17 percent of stablecoin-linked card volume now comes from business programs rather than consumer spending, and that total volume on those cards is up close to 200 percent year over year. Much of that is B2B payouts and cross-border treasury work, the same flows Citi’s merchant and corporate clients generate.
Stablecoin supply overall sits near $291 billion. Payment-focused issuance is what the GENIUS Act covers, and both Ethena and Binance have been positioning around the standard: Ethena plans to direct protocol revenue toward ENA buybacks once USDe’s 14-day average supply reaches $7.5 billion, a threshold that would make it one of the largest compliant-capable tokens in circulation.
| Piece of the collaboration | Who runs it | What it does |
|---|---|---|
| Coinbase Virtual Accounts | Coinbase on Citi’s Virtual Account Wallet | Fiat in, auto-converted to stablecoins, 3.75% reward |
| Merchant stablecoin acceptance | Spring by Citi, powered by Coinbase Payments | Stablecoins at checkout, auto-conversion to fiat |
| Settlement | Citi | Bank of record for converted proceeds |
The competitive read: PayPal has its PYUSD push, Visa has the card data, and now a top-three US bank has wired stablecoin acceptance into merchant acquiring. The binding constraint left is regulation, and that part is on a public clock into early 2027.
The settlement loop in practice
Walk through a payment. A customer in Lisbon pays a US merchant in a dollar stablecoin. Coinbase Payments recognizes the transfer on chain and triggers conversion to dollars at the prevailing rate. Citi, as the merchant’s settlement bank, credits the proceeds to the merchant account the same way it would credit an acquirer batch from Visa or Mastercard. The merchant’s books show dollars. What changed is that the funding currency arrived over a public blockchain instead of a card network.
For payouts, the loop runs the other way. A platform with dollars on deposit at Citi can top up a Coinbase Virtual Account, and the fiat converts automatically into stablecoins for on-chain distribution, useful for payroll, creator payouts or marketplace seller disbursements across borders. Citi’s Virtual Account Wallet sits underneath both directions.
Neither side has published volume targets or pricing. The 3.75 percent reward on stablecoin balances is the most concrete number in the announcement, and it is a rate Citi-class banks cannot match on a plain deposit, which is effectively the point: the reward is what pulls working capital from bank accounts into token form.
What competitors will watch
Bank of America, JPMorgan and others have all floated stablecoin or tokenized-deposit work, but none has yet put consumer and merchant payment volumes through a public-chain token at this level of integration. Citi’s choice to route merchant acceptance through Coinbase Payments rather than build the acceptance stack in-house shortens the path to market and shares the risk with the firm that already processes the most payment stablecoin volume.
Watch three things from here. First, whether other acquirers sign into Spring by Citi’s stablecoin acceptance, which would turn this from a bilateral deal into a distribution standard. Second, whether the 3.75 percent reward survives GENIUS Act implementation rules that may treat yield on payment stablecoins as a policy question rather than a marketing budget line. Third, actual volume disclosures once either side starts reporting quarterly figures. The plumbing is built. Usage is the part nobody can fake.