Coinbase competes for Cloudflare deal to build an AI stablecoin

Coinbase is reportedly in the running to partner with Cloudflare on issuing a stablecoin purpose-built for AI transactions. The deal, first reported by The Information, would position both companies at the intersection of two industries that can’t stop talking about each other.

If that sounds like a corporate Mad Libs combining every buzzy term of 2025 — AI, stablecoins, agents — well, it kind of is. But there’s a real problem being solved here, and the companies chasing it aren’t exactly startups running on vibes.

What we know about the deal

Details remain thin. What’s been reported is that Coinbase ($COIN) is competing — not confirmed as the winner — for a partnership with Cloudflare ($NET) to create a stablecoin tailored for AI-related payments.

Cloudflare, for the uninitiated, is the company that sits between roughly 20% of all web traffic and the servers that host it. It provides security, performance, and infrastructure services to millions of websites and applications. Think of it as the internet’s bouncer and traffic cop rolled into one.

The idea of pairing that kind of scale with a crypto-native payments layer makes a certain amount of sense. AI agents — autonomous software programs that can browse, negotiate, and transact on behalf of users — need a way to pay for things. Traditional payment rails weren’t built for machines making thousands of microtransactions per second.

Stablecoins, pegged to fiat currencies like the US dollar and settling on blockchain networks, are increasingly seen as the obvious answer. They’re programmable, near-instant, and don’t require a credit card number or a bank account.

Why AI agents need their own money pipes

Here’s the thing. When a human buys something online, they pull out a credit card, maybe use Apple Pay, and move on. The transaction costs somewhere between 1.5% and 3.5% in interchange fees, and nobody thinks twice about it on a $50 purchase.

Now imagine an AI agent making 10,000 API calls per hour, each costing fractions of a cent. Visa and Mastercard weren’t designed for that. The fees alone would eat the transaction alive, and the settlement speed — often measured in days — is comically slow for software that operates in milliseconds.

Stablecoins solve both problems. Transaction costs on networks like Base, Coinbase’s own Layer 2 blockchain, can run well below a penny. Settlement is near-instant. And because it’s all programmable, the payment logic can be embedded directly into the AI agent’s workflow.

Coinbase has been laying groundwork here for months. The company’s Base network has become one of the most active Layer 2 chains in the Ethereum ecosystem, processing millions of transactions daily. Its USDC stablecoin — co-issued with Circle — already handles tens of billions in monthly volume. Building an AI-specific payment product on top of that infrastructure isn’t a leap. It’s the next logical step.

What this means for investors

The competitive dynamics are worth watching closely. Coinbase isn’t the only company eyeing AI payments. Stripe acquired stablecoin platform Bridge for $1.1B last year, signaling that traditional fintech sees the same opportunity. PayPal launched its own stablecoin, PYUSD, in 2023. And a constellation of crypto-native startups are building AI agent payment protocols from scratch.

A Cloudflare partnership would be significant because of distribution. Cloudflare’s network touches millions of developers and businesses already building AI applications. Embedding stablecoin payments at the infrastructure layer — rather than bolting them on after the fact — could create a default payment standard that’s hard to displace.

For Coinbase stock, the signal is clear: the company is trying to evolve beyond exchange revenue. Trading fees are cyclical and competitive. Infrastructure and payments revenue is stickier. Every deal like this nudges the company’s revenue mix toward something that Wall Street tends to value more highly.

The risk, of course, is that “AI agent economy” remains more PowerPoint than reality for longer than bulls expect. Autonomous agents making independent purchasing decisions at scale is still largely theoretical. The infrastructure is being built ahead of the demand, which is either visionary or premature depending on your time horizon.

Bottom line: Coinbase competing for a Cloudflare deal isn’t just a headline about two companies talking. It’s a bet that the next massive wave of digital payments won’t be made by humans at all — and that whoever builds the rails for machine-to-machine commerce wins a market that doesn’t fully exist yet.