Needham's John Todaro Says USDC Is ‘Exciting’ for the Long Term and Will Benefit Coinbase

Can the dollar-pegged USDC stablecoin become the de facto U.S. central bank digital currency (CBDC), as Coinbase’s CEO predicted during the company's earnings call Thursday?

Perhaps, said John Todaro, vice president at investment and asset management firm Needham & Co., on CoinDesk TV’s “First Mover” program Friday.

However, the analyst is more sure that Coinbase, the largest U.S.-based crypto exchange, the second-largest by volume in the world and one of the companies behind the stablecoin (with Circle), will benefit from USDC’s growth.

Read more: Coinbase Cuts Q3 Losses in Half, Sees Crypto Headwinds Continuing Into 2023

“USDC is exciting [in the] long term,” Todaro said. “We’re excited about stablecoins.”

The analyst, whose focus is on crypto assets and blockchain research, told CoinDesk TV that considering the slow pace of development for a U.S. CBDC it is “debatable” whether “private markets” will ever choose to use one. But a stablecoin like USDC, which is pegged 1:1 with the U.S. dollar, is another matter.

Read more: What Is a CBDC?

Todaro explained that if Coinbase were to “mint” USDC, it would be entitled to the “revenue share on the back of the reserve assets,” which in turn would mean Coinbase would operate like a more traditional finance firm.

“If you see USDC’s circulating supply continue to grow, and Coinbase accounts are involved with minting USDC,” said Tardano, “as [interest] rates and those reserve assets continue to rise the interest income on that is going to increase.”

Though the crypto exchange’s actual revenue inched just above $590 million, missing Needham & Co.’s $603 million estimate and down from the second quarter’s top line of $803 million, Todaro said it wasn’t “necessarily an awful quarter” for Coinbase. He added that his firm has a buy rating and $89 price target.