The financial system is moving on-chain: How Coinbase is bridging traditional banking and crypto utility with Max Branzburg

Blockchain technology continues to bridge the gap between traditional finance and the digital asset ecosystem. Today, we’re witnessing a fascinating convergence where decentralized finance protocols are being integrated into user-friendly platforms, making sophisticated financial tools accessible to everyday users.

One of the most significant developments in this space is the ability to leverage crypto assets without selling them—unlocking liquidity while maintaining exposure to potential appreciation. Coinbase has recently launched a groundbreaking product that allows customers to borrow USDC against their Bitcoin holdings in under a minute, all powered by onchain lending protocols.

I’m delighted to welcome Max Branzburg, Vice President of Product at Coinbase, to discuss this innovation. As a key architect of Coinbase’s product strategy, Max has been instrumental in developing solutions that make crypto utility more tangible for millions of users. Today, we’ll explore how Bitcoin-backed loans represent a pivotal step in Coinbase’s vision for onchain financial services, the technical infrastructure making this possible, and what this means for the future of personal finance.

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On-Chain Financial Services Are Superior to Traditional Systems

The fundamental premise behind Coinbase’s strategy is that blockchain-based financial services offer inherent advantages over conventional systems. By leveraging on-chain protocols, financial products can be delivered instantly, with minimal or no fees, and without intermediaries—creating a compelling value proposition that traditional finance cannot match.

“We’re really trying to disrupt what the traditional financial system offers today, and that’s one of the reasons that we’re building on chain, and we think that the whole financial system is really moving on chain. One of the powerful features of on-chain financial services is that they are instant and they’re very cheap or free, in most cases, they’re globally accessible. Anyone can access them. They’re permissionless.”

The Platform Approach vs. Vertically Integrated Products

Rather than building proprietary, centralized financial products, Coinbase is creating a platform that connects users to a vast ecosystem of third-party developers. This approach enables rapid innovation cycles and a diversity of products that would be impossible under traditional banking models where each service is built in-house.

“It’s going to be very difficult to compete when you have to build vertically integrated financial products that go through a years-long or multi-year-long development cycle to deliver to your customers, when other platforms can offer dozens or hundreds of those financial products, and see the innovation and iteration on those products every day.”

The Blurring of Centralized and Decentralized Finance

The dichotomy between centralized and decentralized finance is fading as hybrid models emerge. Coinbase exemplifies this trend by providing the trust, security, and regulatory compliance of a centralized entity while enabling access to decentralized protocols—creating a bridge between traditional finance and the crypto ecosystem.

“I think those terms are gonna blur frankly over time. […] This product from Coinbase is a good example of that. I mean, people think of Coinbase as a centralized exchange. This product is really built on decentralized protocols and enabling people to access those decentralized protocols, so I think it is already blurring.”

Utility First, Investment Second: The Evolving Adoption Curve

The traditional crypto adoption path is being inverted. Rather than users entering the space primarily for investment purposes and later discovering utility, many now come for practical applications like instant global payments and only afterward consider investment opportunities.

“What’s interesting is so much of the utility in crypto is actually coming before the investment use case now. Used to be ‘come for the investment, stay for the utility.’ And now in many cases, it’s ‘come for the utility, stay for the investment.’ […] You can send [USDC] anywhere around the world instantly for free, anytime, if it’s the weekend, if it’s non-banking hours.”

Stablecoins as the Gateway for Traditional Financial Institutions

For traditional banks and financial institutions, stablecoins represent the most accessible and immediately valuable entry point into crypto. The massive transaction volume—surpassing major credit card networks—demonstrates the market demand and efficiency gains that financial institutions cannot ignore.

“One of the places that I think banks are seeing the value most clearly is around stablecoins and payments. […] Last year, for example, there were $30 trillion of transactions in stablecoins. That was more than Visa, MasterCard combined did last year. And so the numbers are staggering when you think about it, and so banks are taking notice of this.”

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Coinbase’s New Bitcoin-Backed Loan Product

“So the product we just launched is Bitcoin backed loans with USDC. You can now borrow against any bitcoin that you’re holding on Coinbase. And you can borrow USDC up to $100,000 today. You take that USDC, you earn rewards on it instantly within the Coinbase product. You can also take it off the Coinbase product and use it for everyday purchases, and that loan can be made in under a minute, instantly with the Bitcoin that you have on the platform. So it’s a really interesting and sort of new, innovative way to get more value out of the crypto that you’re holding on Coinbase, we’ve had millions of users for a long time that have held Bitcoin, that don’t want to sell their Bitcoin. They want to stay long they’re invested for the long term, but they do want to have access to liquidity to be able to use in their everyday lives and and for regular purchases. And so now, using on chain protocols, and we can get into some of the details there, you’ll be able to borrow USDC against that Bitcoin without having to sell it.”

The Importance of Speed and On-Chain Technology

“You know, we’re really trying to disrupt what the traditional financial system offers today, and that’s one of the, one of the reasons that we’re building on chain, and we think that the whole financial system is really moving on chain. One of the powerful features of on chain financial services is that they are instant and they’re very they’re very cheap or free, in most cases, they’re globally accessible. Anyone can access them. They’re permissionless. And so really delivering on that promise was critical for us, and not only important for the product to be able to serve customer needs, so that you can you can borrow instantly. You don’t have to worry about any sort of middleman, any processing, any of the sort of things that you might get stuck with in traditional finance. But it’s also the core part of the strategy for why we’re doing this, which is we believe that on chain, financial services are actually better than what exists off chain, they provide more value to customers, and so we’re deliberately building with that technology in order to enable those end user benefits.”

Technical Challenges and Infrastructure Development

“Absolutely, this is the culmination of many years of technical investments in different places. So it takes a lot of work to make it look easy, right? It’s sort of like an iceberg. I mean, I think the what you see is the very tip of it, but there’s, there’s a tremendous amount of innovation under the surface. And you know, a few of the key points of innovation over the last couple of years that have made on chain financial services a reality and culminated in a product like this are one the blockchain technology itself. So you know, years ago, blockchains might have been too slow to actually enable a product like this, or might have been too expensive to build on. Coinbase launched a couple years ago a layer two blockchain called base. Base is extremely fast, extremely cheap, and enables builders to create products like this one. On top of it, there’s also been innovations in wallet technology. So smart contract wallets have been a really critical innovation that enables faster, cheaper engagement with blockchains, and so we’re utilizing smart contract wallets as part of this. Product, and then ultimately, the top of the layer. The easiest part, in some ways, is building excellent user experience around that and with the trust and the security that Coinbase has brought for many years and enabling it to feel as seamless and easy as the typical Coinbase experience of buying and holding Bitcoin, but now you can also borrow against that Bitcoin under the surface. It’s building on all of that technology that’s been built over many, many years. And we can get into the details there, but the hard work certainly is the least visible work in this product, and it makes it feel easy on the surface.”

Key Technology Enablers

“I would say the three most important enablers here were base as a layer two protocol that’s fast and cheap. The second is smart contract wallets, which enable the sort of abstraction of that layer of interaction with the chain, so it feels as seamless as the core consumer product that people have used for many, many years. And then the third piece is actually a product that we call CB BTC, which is Coinbase wrapped Bitcoin, and that’s a product that doesn’t show up in the experience anywhere you don’t even you don’t need to know the technical details of it. But what it does is it enables borrowers to put Bitcoin on the base blockchain in order to borrow against that through a third party protocol. Bitcoin historically has not been you could not use Bitcoin on a blockchain in this kind of protocol. Now, with the introduction of CB BTC, which we launched about six months ago, you can and so those three things have layered up to make this possible. And what’s interesting maybe the fourth is the many number of builders that are creating lending products now on base has just proliferated as a result of that. So you see each of the pieces coming together.

The protocol that we’re working with on on this product specifically, is Morpho, which has built one of the leading lending protocols on on base. There’s many others in addition to that. And I think one of the values here, as you see the pieces stacking, and you see the ease of use and the ability to distribute to millions of retail customers on Coinbase around the world, is more and more builders want to build competitive products, and that’s a good thing. That’s the flywheel that we want to spin where we have great products getting built, we can distribute them to millions of customers around the world. As they take advantage of those products, there are more builders that are entering and creating innovative products which will create more value for customers. And so we’re starting to see that flywheel already spin, and I think we’ll see even more of that given the open nature of this ecosystem and the platform that builders can build on.”

Building a Platform for Financial Services

“Yeah. And this is a really key point. I do think that financial services as a whole are moving on chain, and I think that Coinbase will become a primary financial account for millions of people around the world. But it’s going to do it in a very different way. It’s not going to do it by creating sort of first party, centralized products. That’s that’s the way it’s been done for many, many years, and folks have been successful doing that. But the unique enabler of this on chain technology is that we can tap into a platform where there’s millions of products being built by people all over the world with really constant innovation and experimentation. And what those products are, we can deliver those products to our customers and spin that flywheel.”

Product Strategy: Customer Needs and Technology Investment

“I think there’s, I think there are two, two layers of that. One is really talking to our customers and understanding what our customers needs are, and the second is understanding where the technology is going and making the really long term, hard investments in the technology that will enable the next set of features. So in this case, this was a combination of both, where we’ve had customers for long, a long time, that have wanted to be able to get utility out of their Bitcoin. And it’s not just customers on Coinbase, but across the ecosystem that have held, you know, there’s, there’s nearly $2 trillion of Bitcoin out there that people want to get utility out of. It’s been hard to tap into that for real utility that’s been a need. You know, folks have been knocking our door asking for how we can help them with that. And so that’s, that’s the place we always start is, is, what do people want? How can we solve those needs? But it’s also building this platform and really inventing new technology that can enable these types of use cases.

So seven years ago, when I joined Coinbase, I had a dream that we would move financial services on chain. We saw the potential that it was that it was possible people were experimenting with different things, but there were so many barriers to making it a reality, and that was, you know, the speed and friction of the underlying blockchains, the architecture of the wallets, the ease of use and user experience of the of the user facing applications, all of these things were barriers to realizing that dream. And so in addition to talking to customers and understanding their needs, we had to make those long term investments in the underlying technology. And so those are the two places you know today, I hope that we are both serving customer needs that are kind of short term known. And also, I hope the investments we’re making are two or three years ahead of what’s going to unlock the next wave of adoption. That’s the way that we try to kind of prioritize across the portfolio.”

Coinbase’s Influence on the Ecosystem

“We, you know, we really try to build with the ecosystem. It’s been really rewarding, honestly, like as as we’ve been much more open and ambitious about our vision to bring financial services on chain and to bring Coinbase on chain, it’s been really rewarding to work with that ecosystem and all of the developers and builders that want to be able to distribute to our retail customers, and we’ve been able to work together in in really collaborative ways, where, you know, MorphOS are great example. We also just launched a product Coinbase, one, which is a subscription product that that we have. We just launched on chain benefits with 10 partners across the ecosystem. Morpho is one of them, but nine others also. And it’s this really unique product where, kind of what you would think of as a standard subscription product, you pay a monthly fee for it. You get benefits in the Coinbase app itself, like zero trading fees and all kinds of things. But now all of a sudden, you can take that to any wallet on chain and get additional benefits from 10 partners across the on chain ecosystem. And it’s the sort of thing that’s really uniquely enabled by building in this open platform. And it’s been fun to be able to build with, you know, all of these great builders across the ecosystem.”

Consumer Adoption Trends

“It’s been interesting. There continues to be very strong adoption. There’s now more than 50 million Americans holds crypto, hundreds of millions of people around the world, and historically, certainly, the classic adoption curve was buy your first Bitcoin, then maybe you buy eth, maybe Solana, start to expand, kind of into the longer tail of assets, and then, and then start doing things with those assets. Start staking those assets, maybe earning rewards by saving those assets. Now, you know, borrowing against those assets, that was kind of the traditional, the traditional curve, and there’s still, that’s still an experience that a lot of people are going through.

But what’s interesting is so much of the utility in crypto is actually coming before the investment use case now, and so used to be invest. Come for the investment, stay for the utility. And now in many cases, it’s come for the utility, stay for the investment. And what I mean by that is there’s features like payments, for example, global instant, free payments. You don’t need to be a Bitcoin investor to take advantage of that. Actually, you can onboard use USDC, which is a US dollar back stable coin, and you can send it anywhere around the world instantly for free, anytime, if it’s the weekend, if it’s non banking hours, you know, overnight, you get that instant payment capability that is not possible in the in the traditional banking system today, and so we see people onboarding for those types of utility use cases first, and then getting the investment case second. And that’s been a really interesting evolution. The way people are coming into this space. We see it moving both ways, and the two positively reinforce each other. But increasingly, utility is being built on chain. Financial services are moving on chain, and so we’re leaning into that with products like this one and a number of others in the pipeline.”

Partnership Opportunities for Banks and Fintechs

“We you know, I think that this move on chain is both facilitated by the bridges that we’re building, that coin base is building with banking partners. I think it will also be adopted by banks and fintechs. I hope it’s adopted by banks and fintechs around the world. You know today, one of the one of the great value props of this Bitcoin backed loan product is that Coinbase enables safe, trusted on ramps and off ramps through the banking system. And so it’s very easy to get bitcoin. It’s very easy to borrow against it, take USD off the platform and use it in your everyday life. That is, in and of itself, enabled by deep partnerships with banks around the world. But I do think that the next step in this evolution is as banks and fintechs see what what Coinbase is doing here, and our ability to offer financial services like loans through these on chain protocols, I think they should be doing this also, and I think that we’ll see a wave of a wave of fintechs and banks that start offering novel products, whether it’s payments, whether it’s borrowing, lending, all these products that are offered on chain. I think it’ll take a little bit longer to adopt it’s a it’s a new technology. It requires a new set of capabilities. But I do think that these products will be distributed through many surfaces over time, with Coinbase maybe being the leading one, but not the only one.”

Regulatory Challenges and Business Model Disruption

“It’s, it’s going to require some really innovative thinking in the banks. It is, is very disruptive to the way banks have traditionally run their businesses, both on the certainly on the regulatory side, but but also just the product and business model is a very different model. Today banks monetize the assets that they hold for customers. That is, that is the primary kind of monetization model, business model, we are turning that on its head, and we’re saying we’re actually Coinbase. Not going to monetize those assets. We’re going to share those with the ecosystem and and leverage the an ecosystem of many, many builders that will be able to monetize in different ways. We just want to create the best access point to that. So it’s a very different mental model for banks and fintechs from how they’ve monetized and what their business models have been. I think that, I think you’ll probably see adoption earlier with kind of fintechs and folks that are willing to take a little bit more risk, and then later with banks, but I do think it will become clear that it is very difficult to compete when you have to build vertically integrated financial products that go through a years long or multi year long development cycle to deliver to your customers, when other platforms can offer dozens or hundreds of those financial products, and see the innovation and iteration on those products every day.”

The Pace of Innovation Will Force Adaptation

“I think the pace of innovation on chain is just going to be so much faster that the quality of products that end users. Be able to access will be so much higher, and at some point, I think the banks won’t be able to ignore that, and I think they’ll hopefully see the benefit of that and leverage the same technology.”

The Blurring of Centralized and Decentralized Systems

“Yeah, I think those terms are gonna blur, yeah, frankly, over time. And I think they’re very binary, obviously, right? This product from Coinbase is a good example of that. I mean, people think of Coinbase as it as a centralized exchange. This product is really built on decentralized protocols and enabling people to access those decentralized protocols, so I think it is already blurring. I think that there are real benefits to building the bridges into the traditional financial system. So the banking partnerships I talked about, the support and safety and trust that Coinbase provides, are really critical, but the actual financial products being built on this decentralized system, I think is what gives them that power and and enables customers to get more value out of them. So I think we are seeing that blurring, and I think we’ll continue to see that.”

Banks’ Path to Adoption: Technical Expertise

“You know, I think it, I think it is challenging. We see a lot of the banks, though, that are really leaning into this space, and are are seeing, that are seeing the potential of it. And so I’m encouraged that that they see, they see where it can create value. You know, one of the places that I think banks are seeing the value most clearly is around stable coins and payments. I mean, it’s really fundamental innovation that’s kind of closer to home for what what banks do, and if you think about banks, is oftentimes facilitating millions of dollars of transactions across different regions, different entities, different customer types. One of the things that stable coins is doing is making that dramatically more efficient. So last year, for example, there were $30 trillion of transactions in stable coins. That was more than Visa, MasterCard combined did last year. And so the numbers are staggering when you think about it, and so banks are taking notice of this, and are leaning into it, not just as a nice to have innovation arm, but because it really drives bottom line for them. It’s really core to the strategy.

And so I think banks are leaning in. They’re trying to figure it out. I think that they they will need to certainly bring kind of a different, different mental model around regulation. It doesn’t mean taking more risk. It just means understanding what the really, what the space is doing and what it’s not, and participating in the place that makes sense for them. I think, you know, staying close, partnering with folks in the ecosystem. I think that, you know, players like Coinbase are doing a lot to support adoption in third party businesses, not just for consumers. And so we are helping as many people across the ecosystem adopt crypto and enable crypto for their customers as possible. And so I think looking to partners like that, and just really staying on the front foot, not as a nice to have, but really as a as a must have. I think it’s the right way for the banks to be thinking about it.”

The Mission: Creating Economic Freedom

“Oh, wow. Well, I am, I am incredibly passionate about what I do, and the thing that that brings me to work, and a lot of people Coinbase, is the mission, which is, we’re trying to create more economic freedom in the world. That is the thing that really unifies us. And crypto and this on chain economy is uniquely enabling that economic freedom, and you can see it in this product in particular, where suddenly people can have access to 1000s or millions of different financial products that weren’t possible before. And on the other side, builders can create these financial products from anywhere in the world and distribute them to. To anyone globally. And so I think that that financial freedom, the way that we’re enabling people to access new, better financial services, faster, cheaper than they could otherwise. I think that that economic freedom is going to create tremendous value. It creates better life outcomes, better health outcomes, happiness and fulfillment and and prosperity. And so I’m really excited about that mission that we’re building towards. And I think, in particular, right now, we’re at this unique moment where financial services really are coming on chain and Coinbase is enabling that transition. And so we can see the value that it’s creating for for our customers and for businesses around the world every day. So it’s an exciting time to be in crypto and at Coinbase.”