Coinbase Urges Creation of Stablecoins That Preserve Purchasing Power Amid Dispute with SEC

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October 23, 2023 07:20 EDT

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The US-based crypto exchange Coinbase is calling on developers to create a new and inflation-proof stablecoin for its own blockchain.

The call for the new type of stablecoin came in a blog post on Thursday where the exchange said it is “particularly interested in ‘flatcoins’ – stablecoins that track the rate of inflation.”

It said such coins would offer users with stable purchasing power, while also giving them “resiliency from the economic uncertainty caused by the legacy financial system.”

Coinbase added that it also welcomes other forms of so-called flatcoins that are not pegged to a fiat currency like the US dollar. It said these coins instead could “fill the space between fiat pegged coins and volatile crypto assets.”

“With the recent challenges in our global banking system, we believe these explorations are more important than ever,” the blog post said.

Coinbase is making a Request for Builders on their L2 and one of the products they want to incubate is a non-fiat pegged stable 👀 pic.twitter.com/Fx7PSL2MOD

— MilliΞ (@llamaonthebrink) March 26, 2023

The hope for Coinbase is that developers will use its own layer-2 blockchain known as Base to build the new type of asset. It also promised funds from the Base Ecosystem Fund to kickstart relevant projects, and said this would come in addition to dedicated support from the Base team to help projects succeed.

“Over the last three weeks, we’ve seen a huge amount of interest to be a part of the Base Ecosystem Fund, with a wide range of ideas,” the blog post added.

The call for development of flatcoins comes amid a dispute between Coinbase and the US Securities and Exchange Commission (SEC) over how the exchange conducts its business in the US.

Coinbase was last week threatened with a lawsuit by the SEC in a so-called Wells notice, with the regulator accusing Coinbase of selling “unregistered securities” to the public. Coinbase, on its end, has denied any wrongdoing, saying that it has always done its best to comply with all regulations.

Base was first launched for the public in late February, and the network is being promoted as a “secure, low-cost, developer-friendly” way to build decentralized applications (dApps). The layer-2 network is built on top of the Ethereum blockchain, and will serve as a home both for Coinbase’s own on-chain products and as an open ecosystem for developers.