Coinbase Secures Minority Share in Circle as USDC Expands Blockchain Integration


Coinbase has acquired a minority share in Circle Internet Financial as they part ways from their joint venture, the Centre Consortium, responsible for the issuance of USD Coin (USDC), the second-largest global stablecoin.
The governance and issuance of USDC will now be completely overseen by Circle.
In addition, USDC is set to expand its support by integrating six more blockchains, escalating the total to 15. While the specific blockchains have not been disclosed, previous announcements from Circle hinted at the inclusion of Polkadot, Near, Optimism, and Cosmos for 2023.

Details about Coinbase's exact share in Circle remain undisclosed, but it is understood that the acquisition didn't involve a cash transaction.
The stablecoin landscape has witnessed notable changes recently. For instance, PayPal's introduction of its PYUSD token, in collaboration with Paxos, poses potential challenges to leading stablecoins like USDT and USDC.

Coinbase visualizes a broader horizon for USDC, encompassing foreign currency exchange, cross-border fund transfers, and financial inclusion, as shared by Phil McDonnell, senior director of product management at Coinbase. He, however, minimizes the perceived rivalry with PayPal, suggesting that such initiatives by giants like PayPal only serve to expand the market.

As stablecoin regulation continues to evolve, there are glimpses of clear guidelines emerging, observed Circle's Chief Strategy Officer and Head of Global Policy, Dante Disparte. He highlights the Clarity for Payment Stablecoins Act of 2023 and Circle's recent attainment of a Major Payment Institution License in Singapore. With major players like PayPal stepping in and clearer regulations in sight, the need for a self-regulating structure for stablecoins seems redundant.

In the past year, Circle raised $400 million in funding from prominent investors, including BlackRock and Fidelity Investments, both of which recently ventured into issuing bitcoin ETFs.
Amidst all these changes, Circle took measures last month to streamline its workforce, focusing more on its primary business objectives.

According to a joint statement, both Coinbase and Circle will keep earning from USDC reserve interest. Under their new agreement, revenue from USDC will be divided based on the USDC amount held on their respective platforms, and the interest income from USDC's widespread distribution and usage will be shared equally.