According to a corporate blog post, Coinbase has acquired a minority stake in Circle Internet Financial, thus dissolving Centre Consortium, the issuer of the second biggest stablecoin USDC.
1/ Some major news from @circle and @coinbase on the future of $USDC in this joint blog post from @brian_armstrong and I (@jerallaire). https://t.co/uHuxeRJtiI
— Jeremy Allaire (@jerallaire) August 21, 2023
According to a blog post by Coinbase, the necessity for a separate governing organization like Centre is no longer necessary due to increasing legislative clarity for stablecoins in the United States and throughout the globe. Circle will be in charge of all aspects of issuing and managing USDCs. Previously, only the stablecoin’s issuer was liable. Stablecoins are digital currency tokens whose value is anchored to a trusted asset. The USDC was a currency whose value was set at one dollar.
The Centre Consortium “will no longer exist as a stand-alone entity,” and its operations and management will be taken care of internally. Circle’s role will expand to include safeguarding smart contract keys and ensuring legal conformity.
According to Coinbase’s senior director of product management, Phil McDonnell, the future of USDC extends well beyond crypto trading, into sectors such as foreign exchange, cross-border transfers of money, and financial inclusion. However, he downplayed the possibility of rivalry with PayPal.
Interest earned on USDC reserves will continue to be a source of income for both Coinbase and Circle, and this income will be split in accordance with the proportion of USDC held on each platform.
Coinbase said earlier this month that they had made over $700 million in revenue during the second quarter. Leading up to those results, experts noted that the company’s revenue streams had altered significantly since its IPO in 2021. The company’s income from trading fees drops during bear markets since there is less trading activity on its cryptocurrency exchange. Coinbase received a substantial chunk of its earnings from interest on USDC reserves thanks to its membership in the Centre Consortium.
