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After incubating Coinbase for 14 years, YC finally decided to disburse investment funds using USDC
Original Article Title: "From Investing in Coinbase to Using USDC: YC Waited 14 Years"
Original Article Author: angelilu, Foresight News
The "top startup accelerator" Y Combinator (YC), which has successfully incubated Airbnb, Stripe, and Coinbase, announced on February 3 that starting in Spring 2026, its funded startups can choose to receive a $500,000 investment in the form of the USDC stablecoin. This is also the first time YC has officially announced providing investment in the form of a stablecoin.
From Spectator to Participant
In 2012, when YC invested in Coinbase, the price of Bitcoin was only between $5 and $13. Over the following 14 years, YC, although continuously investing in nearly 100 crypto companies, still transferred investment funds through traditional bank transfers.
An important reason for YC's change was the passage of the "GENIUS Act" in July 2025 in the United States. This law established a federal regulatory framework for stablecoins, requiring 1:1 reserve backing and providing holders with redemption rights. With the advent of compliance certainty, the biggest barrier for top institutions to adopt cryptocurrency was removed. Just 7 months later, YC announced the stablecoin payment option.
The true significance of this move is that YC started to "use" stablecoins themselves. When an institution is willing to migrate its core business processes to new technology, that is a true vote of confidence. From an investor to a user, from a spectator to a participant, YC completed a thorough role transition in 14 years.
Why Choose a Stablecoin?
The first benefit of investing with stablecoins is efficiency. Imagine an Indian startup wanting to receive a $500,000 investment from YC. If using traditional wire transfer, they might need to pay thousands of dollars in fees and wait 3 to 7 days; with USDC, the cost is almost zero, and the funds arrive instantly.
Furthermore, YC's decision is also based on a practical judgment: the new generation of entrepreneurs are already "Crypto Native." YC stated in its announcement that the practical application of stablecoins is growing in its portfolio companies, especially in markets like India and Latin America.
Startups, including Aspora and DolarApp, have been using stablecoins to help customers in regions where traditional banking infrastructure is limited or costly to more efficiently transfer and store funds. To align with this trend, YC specifically emphasized supporting stablecoins on three blockchains: Ethereum, Base, and Solana, allowing global entrepreneurs to choose the most suitable payment path.
Why Choose USDC?
Keen observers have noted that YC's mention of stablecoin usage was not generic but a specific callout to use USDC. While USDC's market capitalization is lower than USDT, it is issued by Circle, a U.S.-based company, and is regulated by the U.S. Federal Reserve and various state agencies. As a benchmark of Silicon Valley venture capital, YC must ensure that every cent complies with U.S. regulatory requirements.
Let's not forget that YC invested in Coinbase back in 2012, and Coinbase is one of the co-founders of USDC. Additionally, Nemil Dalal, the YC partner responsible for YC's crypto business, previously served as Coinbase's product lead. This "kinship" relationship may also naturally lead YC to have more trust in and support for the USDC ecosystem.
Venture Capital's "Nokia Moment"
In the crypto venture capital (Crypto VC) circle, the use of stablecoins is not new, with players like Paradigm or a16z Crypto having long used them in a "special" capacity. However, YC's breakthrough lies in the fact that it is the "godfather of mainstream venture capital," with over 90% of its investment projects focusing on AI, enterprise services, or consumer goods, rather than cryptocurrency companies.
Previously, venture capitalists often used stablecoins as a "last resort" because founders couldn't open a USD account. But now, YC actively includes this option in every founder's standard contract template. Whether you are working on a large-scale model or in biopharmaceuticals, if you wish, you can directly receive USDC. This procedural, standardized action signifies that the venture capital industry is experiencing its "Nokia moment"—where traditional transfer methods are being disrupted.
Will Other VCs Follow Suit?
Currently, the attitudes of top Silicon Valley VCs toward crypto are diverging. a16z crypto represents the "radicals" and, in early 2026, raised $15 billion, focusing on investments in AI and the crypto space. YC, on the other hand, represents the "pragmatists," starting from payments, not radical but extremely sound.
More traditional VCs may still be on the sidelines, but history provides a clear reference point. Traditional financial institutions typically take 3 to 5 years to move from skepticism to embrace: both Goldman Sachs and J.P. Morgan have gone from calling it a "fraud" to launching related businesses.
According to an a16z report, currently 90% of financial institutions are integrating stablecoins. The transaction volume of stablecoins in 2025 has reached $46 trillion, nearly triple that of Visa. The market predicts that the circulation of stablecoins will surpass $1 trillion in 2026. Behind these numbers is an irreversible trend. YC's decision may just be a node in the stablecoin wave.
What Is YC Looking for in Entrepreneurs?
Currently, YC's Spring 2026 Startup Program is now open for applications, and the incubation program will take place in San Francisco from April to June. The application deadline is Pacific Time 12:00 on February 10, and applications submitted before the deadline will receive results by March 13.
YC's "Fintech 3.0" initiative launched in September 2025 in partnership with Base and Coinbase Ventures, emphasizes funding on-chain startup projects in the following areas: stablecoin applications, tokenization and transactions (new credit markets, on-chain capital formation, new trading interfaces), Apps and Agents (including social, financial, collaborative, gaming, etc.).
14 years ago, YC invested in Coinbase was a bet on the future; 14 years later, YC's use of USDC is about becoming the future.
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There is a sentence on X's official help page that is still hanging there: "If malicious insiders or X itself cause encrypted conversations to be exposed through legal processes, both the sender and receiver will be completely unaware."
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In Signal's end-to-end encryption, the keys never leave your device. X, the court, or any external party does not hold your keys. Signal's servers have nothing to decrypt your messages; even if they were subpoenaed, they could only provide registration timestamps and last connection times, as evidenced by past subpoena records.
X Chat uses the Juicebox protocol. This solution divides the key into three parts, each stored on three servers operated by X. When recovering the key with a PIN code, the system retrieves these three shards from X's servers and recombines them. No matter how complex the PIN code is, X is the actual custodian of the key, not the user.
This is the technical background of the "help page sentence": because the key is on X's servers, X has the ability to respond to legal processes without the user's knowledge. Signal does not have this capability, not because of policy, but because it simply does not have the key.
The following illustration compares the security mechanisms of Signal, WhatsApp, Telegram, and X Chat along six dimensions. X Chat is the only one of the four where the platform holds the key and the only one without Forward Secrecy.
The significance of Forward Secrecy is that even if a key is compromised at a certain point in time, historical messages cannot be decrypted because each message has a unique key. Signal's Double Ratchet protocol automatically updates the key after each message, a mechanism lacking in X Chat.
After analyzing the X Chat architecture in June 2025, Johns Hopkins University cryptology professor Matthew Green commented, "If we judge XChat as an end-to-end encryption scheme, this seems like a pretty game-over type of vulnerability." He later added, "I would not trust this any more than I trust current unencrypted DMs."
From a September 2025 TechCrunch report to being live in April 2026, this architecture saw no changes.
In a February 9, 2026 tweet, Musk pledged to undergo rigorous security tests of X Chat before its launch on X Chat and to open source all the code.
As of the April 17 launch date, no independent third-party audit has been completed, there is no official code repository on GitHub, the App Store's privacy label reveals X Chat collects five or more categories of data including location, contact info, and search history, directly contradicting the marketing claim of "No Ads, No Trackers."
Not continuous monitoring, but a clear access point.
For every message on X Chat, users can long-press and select "Ask Grok." When this button is clicked, the message is delivered to Grok in plaintext, transitioning from encrypted to unencrypted at this stage.
This design is not a vulnerability but a feature. However, X Chat's privacy policy does not state whether this plaintext data will be used for Grok's model training or if Grok will store this conversation content. By actively clicking "Ask Grok," users are voluntarily removing the encryption protection of that message.
There is also a structural issue: How quickly will this button shift from an "optional feature" to a "default habit"? The higher the quality of Grok's replies, the more frequently users will rely on it, leading to an increase in the proportion of messages flowing out of encryption protection. The actual encryption strength of X Chat, in the long run, depends not only on the design of the Juicebox protocol but also on the frequency of user clicks on "Ask Grok."
X Chat's initial release only supports iOS, with the Android version simply stating "coming soon" without a timeline.
In the global smartphone market, Android holds about 73%, while iOS holds about 27% (IDC/Statista, 2025). Of WhatsApp's 3.14 billion monthly active users, 73% are on Android (according to Demand Sage). In India, WhatsApp covers 854 million users, with over 95% Android penetration. In Brazil, there are 148 million users, with 81% on Android, and in Indonesia, there are 112 million users, with 87% on Android.
WhatsApp's dominance in the global communication market is built on Android. Signal, with a monthly active user base of around 85 million, also relies mainly on privacy-conscious users in Android-dominant countries.
X Chat circumvented this battlefield, with two possible interpretations. One is technical debt; X Chat is built with Rust, and achieving cross-platform support is not easy, so prioritizing iOS may be an engineering constraint. The other is a strategic choice; with iOS holding a market share of nearly 55% in the U.S., X's core user base being in the U.S., prioritizing iOS means focusing on their core user base rather than engaging in direct competition with Android-dominated emerging markets and WhatsApp.
These two interpretations are not mutually exclusive, leading to the same result: X Chat's debut saw it willingly forfeit 73% of the global smartphone user base.
This matter has been described by some: X Chat, along with X Money and Grok, forms a trifecta creating a closed-loop data system parallel to the existing infrastructure, similar in concept to the WeChat ecosystem. This assessment is not new, but with X Chat's launch, it's worth revisiting the schematic.
X Chat generates communication metadata, including information on who is talking to whom, for how long, and how frequently. This data flows into X's identity system. Part of the message content goes through the Ask Grok feature and enters Grok's processing chain. Financial transactions are handled by X Money: external public testing was completed in March, opening to the public in April, enabling fiat peer-to-peer transfers via Visa Direct. A senior Fireblocks executive confirmed plans for cryptocurrency payments to go live by the end of the year, holding money transmitter licenses in over 40 U.S. states currently.
Every WeChat feature operates within China's regulatory framework. Musk's system operates within Western regulatory frameworks, but he also serves as the head of the Department of Government Efficiency (DOGE). This is not a WeChat replica; it is a reenactment of the same logic under different political conditions.
The difference is that WeChat has never explicitly claimed to be "end-to-end encrypted" on its main interface, whereas X Chat does. "End-to-end encryption" in user perception means that no one, not even the platform, can see your messages. X Chat's architectural design does not meet this user expectation, but it uses this term.
X Chat consolidates the three data lines of "who this person is, who they are talking to, and where their money comes from and goes to" in one company's hands.
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After the blockade of the Strait of Hormuz, when will the war end?
Before using Musk's "Western WeChat" X Chat, you need to understand these three questions
The X Chat will be available for download on the App Store this Friday. The media has already covered the feature list, including self-destructing messages, screenshot prevention, 481-person group chats, Grok integration, and registration without a phone number, positioning it as the "Western WeChat." However, there are three questions that have hardly been addressed in any reports.
There is a sentence on X's official help page that is still hanging there: "If malicious insiders or X itself cause encrypted conversations to be exposed through legal processes, both the sender and receiver will be completely unaware."
No. The difference lies in where the keys are stored.
In Signal's end-to-end encryption, the keys never leave your device. X, the court, or any external party does not hold your keys. Signal's servers have nothing to decrypt your messages; even if they were subpoenaed, they could only provide registration timestamps and last connection times, as evidenced by past subpoena records.
X Chat uses the Juicebox protocol. This solution divides the key into three parts, each stored on three servers operated by X. When recovering the key with a PIN code, the system retrieves these three shards from X's servers and recombines them. No matter how complex the PIN code is, X is the actual custodian of the key, not the user.
This is the technical background of the "help page sentence": because the key is on X's servers, X has the ability to respond to legal processes without the user's knowledge. Signal does not have this capability, not because of policy, but because it simply does not have the key.
The following illustration compares the security mechanisms of Signal, WhatsApp, Telegram, and X Chat along six dimensions. X Chat is the only one of the four where the platform holds the key and the only one without Forward Secrecy.
The significance of Forward Secrecy is that even if a key is compromised at a certain point in time, historical messages cannot be decrypted because each message has a unique key. Signal's Double Ratchet protocol automatically updates the key after each message, a mechanism lacking in X Chat.
After analyzing the X Chat architecture in June 2025, Johns Hopkins University cryptology professor Matthew Green commented, "If we judge XChat as an end-to-end encryption scheme, this seems like a pretty game-over type of vulnerability." He later added, "I would not trust this any more than I trust current unencrypted DMs."
From a September 2025 TechCrunch report to being live in April 2026, this architecture saw no changes.
In a February 9, 2026 tweet, Musk pledged to undergo rigorous security tests of X Chat before its launch on X Chat and to open source all the code.
As of the April 17 launch date, no independent third-party audit has been completed, there is no official code repository on GitHub, the App Store's privacy label reveals X Chat collects five or more categories of data including location, contact info, and search history, directly contradicting the marketing claim of "No Ads, No Trackers."
Not continuous monitoring, but a clear access point.
For every message on X Chat, users can long-press and select "Ask Grok." When this button is clicked, the message is delivered to Grok in plaintext, transitioning from encrypted to unencrypted at this stage.
This design is not a vulnerability but a feature. However, X Chat's privacy policy does not state whether this plaintext data will be used for Grok's model training or if Grok will store this conversation content. By actively clicking "Ask Grok," users are voluntarily removing the encryption protection of that message.
There is also a structural issue: How quickly will this button shift from an "optional feature" to a "default habit"? The higher the quality of Grok's replies, the more frequently users will rely on it, leading to an increase in the proportion of messages flowing out of encryption protection. The actual encryption strength of X Chat, in the long run, depends not only on the design of the Juicebox protocol but also on the frequency of user clicks on "Ask Grok."
X Chat's initial release only supports iOS, with the Android version simply stating "coming soon" without a timeline.
In the global smartphone market, Android holds about 73%, while iOS holds about 27% (IDC/Statista, 2025). Of WhatsApp's 3.14 billion monthly active users, 73% are on Android (according to Demand Sage). In India, WhatsApp covers 854 million users, with over 95% Android penetration. In Brazil, there are 148 million users, with 81% on Android, and in Indonesia, there are 112 million users, with 87% on Android.
WhatsApp's dominance in the global communication market is built on Android. Signal, with a monthly active user base of around 85 million, also relies mainly on privacy-conscious users in Android-dominant countries.
X Chat circumvented this battlefield, with two possible interpretations. One is technical debt; X Chat is built with Rust, and achieving cross-platform support is not easy, so prioritizing iOS may be an engineering constraint. The other is a strategic choice; with iOS holding a market share of nearly 55% in the U.S., X's core user base being in the U.S., prioritizing iOS means focusing on their core user base rather than engaging in direct competition with Android-dominated emerging markets and WhatsApp.
These two interpretations are not mutually exclusive, leading to the same result: X Chat's debut saw it willingly forfeit 73% of the global smartphone user base.
This matter has been described by some: X Chat, along with X Money and Grok, forms a trifecta creating a closed-loop data system parallel to the existing infrastructure, similar in concept to the WeChat ecosystem. This assessment is not new, but with X Chat's launch, it's worth revisiting the schematic.
X Chat generates communication metadata, including information on who is talking to whom, for how long, and how frequently. This data flows into X's identity system. Part of the message content goes through the Ask Grok feature and enters Grok's processing chain. Financial transactions are handled by X Money: external public testing was completed in March, opening to the public in April, enabling fiat peer-to-peer transfers via Visa Direct. A senior Fireblocks executive confirmed plans for cryptocurrency payments to go live by the end of the year, holding money transmitter licenses in over 40 U.S. states currently.
Every WeChat feature operates within China's regulatory framework. Musk's system operates within Western regulatory frameworks, but he also serves as the head of the Department of Government Efficiency (DOGE). This is not a WeChat replica; it is a reenactment of the same logic under different political conditions.
The difference is that WeChat has never explicitly claimed to be "end-to-end encrypted" on its main interface, whereas X Chat does. "End-to-end encryption" in user perception means that no one, not even the platform, can see your messages. X Chat's architectural design does not meet this user expectation, but it uses this term.
X Chat consolidates the three data lines of "who this person is, who they are talking to, and where their money comes from and goes to" in one company's hands.
The help page sentence has never been just technical instructions.
App