Coinbase Acquires Stake in Circle and Dissolves Centre Consortium in USDC Move

Coinbase, one of the largest crypto exchanges globally, has taken a step closer to the world of stablecoins by acquiring a stake in Circle Internet Financial, the issuer of the USD Coin (USDC). Additionally, Coinbase and Circle jointly announced the dissolution of the Centre Consortium, marking a significant shift in the governance structure of the second-largest stablecoin.

The joint announcement was made through a blog post on Circle’s official website on August 21. The post revealed that Coinbase, known for its influence and scale within the crypto landscape, has opted to purchase a minority equity stake in Circle Internet Financial.

The move signifies a deeper level of collaboration between the two industry giants, focusing on the future of the financial system and stablecoins.

As Jeremy Allaire, CEO of Circle, and Brian Armstrong, CEO of Coinbase, stated in the joint blog post:

“Reflecting Coinbase’s belief in the fundamental importance of stablecoins to the broader crypto economy, Coinbase is taking an equity stake in Circle. This means that Coinbase and Circle will now have even greater strategic and economic alignment on the future of the financial system.”

Jeremy Allaire, CEO of Circle.

The Centre Consortium, a collaborative effort between Circle and Coinbase, was originally established to oversee the governance of USDC, a stablecoin tethered to the U.S. dollar.

However, as regulatory clarity for stablecoins emerged, both companies recognized the evolving landscape and determined that a separate governance entity like Centre was no longer necessary.

With this decision, Circle will take on the exclusive responsibility of USDC issuance and governance, streamlining operations and aligning with regulatory expectations.

This significant shift shows the maturation of the stablecoin market and highlights the need for clarity in the evolving regulatory environment.

As the CEOs of both companies emphasized in the blog post:

“Centre will no longer exist as a stand-alone entity, and Circle will remain the issuer of USDC, bringing any Centre governance and operations responsibilities in-house.”

Revised Revenue Distribution and Expanding Multi-Chain Access

Coinbase’s equity investment in Circle shows its commitment to the stablecoin ecosystem and USDC in particular. While the exact amount of the equity stake was not disclosed, the CEOs of both companies emphasized the strategic alignment they have achieved through this arrangement.

As the joint blog post highlighted:

“We will now equally share in interest income generated from the broader distribution and usage of USDC.”

Furthermore, the revamped agreement changes the way revenue is shared. Previously, revenue distribution was based on the amount of USDC distributed and held on each company’s platform.

Under the new setup, the revenue distribution will depend on the quantity of USDC held on individual platforms. This change aims to incentivize wider circulation and utilization of USDC across the ecosystem.

Circle’s blog post also revealed plans for the expansion of USDC across multiple blockchains. Between September and October, USDC is set to debut on six additional blockchains, bringing the total number of supported blockchains to 15.

While the exact identities of the new blockchains were not disclosed, this expansion emphasizes the growing demand for stablecoin accessibility on various blockchain networks.

As the blog post highlighted:

“As part of this next chapter, Coinbase and Circle have reached a new agreement.”

This strategic move aligns with Circle’s vision to further accelerate the momentum of USDC’s adoption among developers globally. The ability to use USDC across a multitude of blockchains enhances its versatility and utility within the broader cryptocurrency ecosystem.

The collaboration between these two industry giants sets the stage for a future where stablecoins play an even more integral role in the global financial ecosystem.

NB: Any Information provided is NOT FINANCIAL ADVICE. Do Your Research before making any Financial Decisions.