Coinbase and Cloudflare Launch x402 Foundation to Develop AI-Payment Ecosystem

Coinbase Global Inc. (COIN) and Cloudflare Inc. (NET) are collaborating to launch the x402 Foundation, an open payment standard that enables websites to charge money automatically when you use their services, without entering credit card info manually, developing an artificial intelligence-based payment ecosystem.

The move aims to make Coinbase a central player in online payments — not just a crypto exchange — and open up a new revenue stream. 

“It brings cryptocurrency deeper into internet infrastructure,” said Michael Miller, an equity analyst at Morningstar. “It’s essentially part of how they want to diversify away from being so heavily transaction focused.”

The initiative reflects the interest in the rapid growth of AI and autonomous systems and also represents Coinbase going beyond its core cryptocurrency exchange operations toward internet infrastructure (the physical and software tools that run the internet), exploring more opportunities in the AI-driven digital economy. Coinbase shares were little changed on the news. 

Legacy payment systems were built for people, not machines, which require people to manually enter their credit card to pay for the service they use. 

x402 changes this by enabling real-time payment using stablecoin (digital dollar) transactions, which lets websites and apps get paid automatically when people or programs use their tools or data, without accounts, sessions, or credential management, making automatic AI or app-to-app payments possible.

For customers, x402 could make your payment more seamless. A personal AI assistant could help you order groceries, book flights, or pay for research papers or data automatically, paying for these services directly through x402.

“Coinbase has been exploring internet payment standards since 2015, and the technology is finally here,” said Erik Reppel, Head of Engineering for Coinbase Developer Platform. “Agentic commerce is a once-in-a-generation opportunity to rethink how value moves online. The x402 Foundation will help lay the groundwork to make it happen.”

The x402 Foundation will focus on transparent governance, supporting the ecosystem growth with grants, and ensuring x402 works across platforms, industries, and geographies, with Cloudflare’s expertise in internet infrastructure and global scalability.

Of course, there is still development necessary. No matter how far it could go in the future, Coinbase will need to tackle the current challenges it faces.

“The biggest risk continues to be competition and fee compression,” according to Sasha Jovanovic, an analyst at Simply Wall St. “Neither of which changes materially in the immediate term as a result of this news.”