Coinbase Leads $2.5 Billion Race With Mastercard For Stablecoin Startup BVNK

US crypto exchange Coinbase leads a $2.5 billion race with Mastercard to acquire the stablecoin startup BVNK.

That’s according to a report by Fortune, which cited sources familiar with the matter as saying the two companies have held advanced talks with BVNK on the acquisition.

The terms and winning bidder have not been finalized yet with the sale price expected to be between $1.5 and $2.5 billion. Three of the sources said Coinbase appears to have an edge over Mastercard.

If a deal is reached, it could be one of the largest acquisitions of a stablecoin firm to date.

Citi Buys Stake In BVNK

BVNK’s core technology is a blockchain-payments rail that facilitates stablecoin transactions globally. It also allows customers to seamlessly move funds between fiat and stablecoins.

The reported talks between Coinbase, Mastercard and BVNK comes hard on the heels of news that banking giant Citi has acquired a stake in the stablecoin infrastructure firm. 

That investment was performed through the bank’s venture capital arm, Citi Ventures. BVNK has not provided details on how large the investment was or at what valuation the deal was made. 

However, one of BVNK’s co-founders, Chris Harmse, said the investment was made at a valuation higher than the $750 million that was publicly disclosed at its latest funding round.

Citi’s investment comes just months after the institution warned that stablecoins could drain traditional banks’ deposits. 

In May, BVNK revealed that it also secured a strategic investment from Visa through its venture capital arm, Visa Ventures. 

Stablecoin Market Booms On GENIUS Act Signing

The recent moves by payment and finance giants into BVNK comes amid a boom for the stablecoin market.

In the past couple of months, the capitalization for the stablecoin sector has been on a gradual rise. This uptick accelerated around mid-July, when US President Donald Trump signed the GENIUS Act into law, providing the first regulatory framework for stablecoin firms that are looking to issue their tokens in the US.

That bill provided the industry with some long-awaited regulatory clarity, and opened the way for firms in the traditional finance (TradFi) space to enter the stablecoin market. 

Following Trump’s July signing of the GENIUS Act, the stablecoin market cap went on to soar to above $300 billion for the first time, data from DefiLlama shows.

Stablecoin market cap

Stablecoin market cap (Source: DefiLlama)

In the last week alone, the stablecoin market cap has risen 0.9%, with around $2.721 billion flowing into the market, and Coinbase predicts that the space will reach $1.2 trillion by 2028.

Meanwhile, Citi’s base case forecast is that the market will hit $1.6 trillion by 2030, adding that a bullish scenario could see the sector’s capitalization reach “up to $3.7 trillion.”

Analysts Concerned That Stablecoin Growth Comes At A Cost For TradFi

The predicted growth for the stablecoin market has, however, attracted warnings of a decrease in deposits for banks in the traditional finance space.

Standard Chartered said that US dollar-backed stablecoins “could pull as much as $1 trillion out of emerging market banks over the next three years.” 

Banking lobbies have also warned lawmakers of a “loophole” in the GENIUS Act that could lead to outflows as high as $6.6 trillion from the banking industry. They argue that the GENIUS Act’s failure to extend its prohibition on stablecoin firms offering yields to token holders to third parties and affiliates gives the firms a way to circumvent the restriction.

However, the crypto industry has pushed back against the banking lobbies’ claims, and said that their efforts stem from them trying to prevent new competition from entering the market. 

That’s as stablecoins, through exchanges and third party platforms, offer token holders much higher yields than the average offered by savings accounts with banks. As such, many in the space have said that banks will have to increase the yields they offer customers or risk losing business due to greed.

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