Coinbase, one of the leading cryptocurrency exchanges, has reportedly purchased equity in Circle, the company behind the popular stablecoin USDC. This move comes as USDC’s market cap has skyrocketed from $500 million to nearly $26 billion in just five years, according to CoinGecko.
Previously, Circle had been the main driving force behind USDC, with Coinbase playing a smaller role as a distributor and promoter. However, Coinbase has now decided to take a more hands-on approach and increase its involvement in the project.
Under the previous agreement, Coinbase and Circle shared revenue based on USDC holdings and minting and distribution statistics. However, a new agreement has been reached that focuses more on holdings, including those on third-party DeFi wallets. Circle CEO Jeremy Allaire stated that this new arrangement creates a stronger alignment for long-term success.
This news comes shortly after Circle announced the dissolution of the Centre Consortium, which had provided governance over USDC since its launch. Allaire argued that the consortium was no longer necessary as the planned partnerships with other firms did not materialize. With Coinbase and Circle already handling all the necessary duties for USDC, they agreed to dissolve the consortium.
The exact size of Coinbase’s equity stake in Circle has not been disclosed, but Allaire confirmed that it is a minority stake and that Circle will still maintain control of the project. Once the formalities are completed, Circle plans to continue upgrading USDC’s capabilities and expand its presence on six new blockchains. The specific blockchains have not been revealed yet.
In the past, Circle has launched a EUR-based stablecoin and has worked on cross-chain capabilities and programmable wallets to make USDC more attractive to developers. With Coinbase’s increased involvement and the ongoing improvements to USDC, the stablecoin is poised for further growth and success in the future.
Overall, this move by Coinbase to purchase equity in Circle demonstrates the company’s commitment to the development and success of USDC. As the competition in the stablecoin market intensifies, it will be interesting to see how Coinbase and Circle continue to innovate and expand the reach of USDC.
