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Coinbase, a renowned cryptocurrency exchange, has expressed its intention to modernize its direct deposit system by replacing traditional ACH deposits with blockchain-based stablecoin settlements, as per a blog post penned by Yuga Cohler, a senior software engineer at Coinbase.
The New Move from Coinbase!
Coinbase‘s ultimate aim, as outlined in the blog post, is to update the financial system while focusing on consumer rights and safety, and thereby, promote the global adoption of cryptocurrency. The exchange criticizes the current direct deposit system in the US, known as the Automated Clearing House (ACH), for its inefficiencies and numerous shortcomings, including the involvement of multiple parties and complicated processes.
Coinbase added that these issues inevitably lead to delays and a lack of standardization, but it believes that blockchain-based stablecoin settlements using a USD-pegged token like USDC could address these problems. Above all, performing transactions on the blockchain could provide faster approval times than the traditional ACH system, which can take one to two business days.
Advantage Statements from Coinbase!
Additionally, blockchain-based agreements eliminate the need for intermediaries like Originating Depository Financial Institutions (ODFIs) and Receiving Depository Financial Institutions (RDFIs). Coinbase stated that this approach would enable users to have complete control over their assets. From a security standpoint, Coinbase emphasized the advantages of blockchain technology, including the benefits of decentralization and cryptography, and commented on the shift to stablecoin settlement:
It can offer security guarantees similar to ACH transactions without compromising on the settlement time.
Moreover, Coinbase stated that a blockchain-based direct deposit system could provide “faster approval times, significant cost savings, and minimum price volatility” while eliminating intermediaries. Coinbase further said:
By prioritizing consumer rights and safety, we can promote a future where financial transactions are not just efficient but also empower individuals and businesses with economic freedom and opportunity on a global scale.
