Coinbase Global has announced its intent to purchase an equity stake in Circle Internet Financial, a cryptocurrency operator. Additionally, the jointly managed Centre Consortium, which oversees the stablecoin USD Coin (USDC), will be discontinued as a result of this move.
improved Regulatory Environment
The decision comes against the backdrop of increasing regulatory clarity for stablecoins not only in the United States but also globally. With this improved regulatory environment, the necessity for a separate governing entity like Centre has diminished, according to a blog post by Coinbase. As a result, Circle will assume full control over the issuance and governance of USDC. Historically, Circle had only served as the issuer of this stablecoin. Stablecoins are digital tokens tied to stable assets to mitigate the extreme volatility often found in cryptocurrencies. In the case of USDC, its value is pegged to the US dollar.
Coinbase plans to launch USDC on six new blockchains, with this expansion taking place between September and October. This will increase the multi-chain accessibility of USDC to a total of 15 blockchains.
Both Coinbase and Circle will continue to generate revenue through interest income from the reserves supporting USDC. Under a newly arranged agreement, revenue will be shared proportionally based on the amount of USDC held on each platform.
In their joint statement, Coinbase commented, “We will now equally share in interest income generated from the broader distribution and usage of USDC.”
In essence, Coinbase’s investment in Circle and the dissolution of the Centre Consortium represent strategic moves in response to evolving regulatory conditions and a desire to simplify the governance structure surrounding the widely used stablecoin, USDC.