- Coinbase acquired a minority stake in Circle as the Centre Consortium dissolved.
- The expansion of USDC included an integration with additional blockchains and regulatory advancements.
Coinbase has acquired a minority stake in Circle Internet Financial. As part of this move, their jointly managed Centre Consortium will be dissolved. This consortium had overseen the issuance of USD Coin [USDC], which stands as the world’s second-largest stablecoin.
The dissolution of the Centre Consortium marks a significant shift in the stablecoin landscape. Circle is taking the reins of the USDC stablecoin fully in-house, assuming both the issuance and governance responsibilities. This move signifies a reorganization of roles and responsibilities in the stablecoin ecosystem.
A noteworthy development is the integration of USDC with six additional blockchains. This expansion will bring the total number of supported blockchains to 15.
The specific blockchains that will accommodate USDC haven’t been explicitly identified in the reports. However, Circle had previously expressed intentions to add prominent chains like Polkadot [DOT], Near [NEAR], Optimism [OP], and Cosmos [ATOM] to its fold in 2023.
The partnership between Coinbase and Circle doesn’t disclose the exact size of the minority stake that Coinbase is obtaining in Circle Internet Financial. Moreover, the acquisition of this stake hasn’t involved a cash transaction between the two entities.
Navigating the industry dynamics
Coinbase’s foray into this strategic collaboration aligns with its broader ambitions. The scope of USDC is anticipated to transcend the realm of crypto trading, extending its utility to domains like foreign exchange, cross-border fund transfers, and financial inclusivity.
While the emergence of PayPal’s [PYUSD] stablecoin introduces a potential competitor in the dollar-pegged stablecoin arena, Coinbase’s Phil McDonnell emphasizes that PayPal’s entry into the space is likely to broaden the overall adoption of cryptocurrencies.
In the evolving landscape of stablecoin regulation, there have been notable steps towards clarity. The Clarity for Payment Stablecoins Act of 2023, enjoying bipartisan support within a key U.S. House of Representatives committee, exemplifies the evolving regulatory framework.
Circle’s Chief Strategy Officer and Head of Global Policy, Dante Disparte, indicates that this regulatory clarity has paved the way for the dissolution of the Centre Consortium, particularly in light of new entrants like PayPal into the stablecoin sector.
Circle’s financial journey has seen various milestones, including a funding round last year that raised $400 million. This capital infusion included contributions from heavyweight asset managers like BlackRock and Fidelity Investments.
In a bid to strengthen its financial position and refocus on core business activities, Circle recently underwent a workforce reduction. Despite this restructuring, both Coinbase and Circle are set to continue generating revenue from USDC reserves interest income.
Under the revised arrangement, this revenue-sharing will be based on the volume of USDC held on each platform. In addition, there will be equal sharing of interest income generated from the broader distribution and utilization of USDC.