Hassan Maishera
TL;DR
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Coinbase has acquired a stake in Circle as it bets on the future of the USDC stablecoin.
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The companies did not disclose the amount Coinbase invested in Circle.
Coinbase Invests In Circle
Cryptocurrency exchange Coinbase has acquired an equity stake in Circle, the issuer of the USDC stablecoin. This latest development comes as the two companies look to cement their control over the governance and issuance of the stablecoin.
In a joint blog post by CEO Jeremy Allaire and Coinbase CEO Brian Armstrong on Monday, the companies outlined the changes. However, the terms of Coinbase’s equity stake in Circle were not revealed.
Coinbase’s investment means that the cryptocurrency exchange and Circle no longer need the Centre Consortium, a voluntary governance group created five years ago to oversee USDC. The team said;
“Centre will no longer exist as a stand-alone entity, and Circle will remain as the issuer of USDC, bringing any Centre governance and operations responsibilities in-house. The new structure will streamline the operations and governance and enhance the direct accountability of Circle as the issuer, including holding all the smart contract keys, complying with regulations on the governance of reserves and enabling USDC on new blockchains.”
USDC To Launch On Six New Blockchains
Following this investment, the USDC stablecoin is set to launch on six new blockchains by next month. However, the blockchains are yet to be identified.
Circle added that it would take full control over USDC issuance and governance as part of the agreement.
The two companies said the revenue generated will continue to be shared based on the amount of USDC held on each of their platforms. Furthermore, Coinbase and Circle will now equally share in interest income generated from the broader distribution and usage of USDC.
“Coinbase and Circle will continue to generate revenue from USDC reserves interest income. Under the parties’ new arrangement, this revenue will continue to be shared based on the amount of USDC held on each of our platforms, and additionally, we will now equally share in interest income generated from the broader distribution and usage of USDC,” the companies added.
This latest development comes a few weeks after PayPal launched its stablecoin, PYUSD, providing stiff competition to USDC and other stablecoins in the market.
