Coinbase Exchange Secures Minority Stake in Circle
Coinbase, the renowned cryptocurrency exchange, has acquired a minority stake in Circle Internet Financial. This deal comes alongside the dissolution of the Centre Consortium, which was co-founded by both companies in 2018 and was responsible for issuing the USD Coin (USDC) - the world's second most popular stablecoin.
Historically, the two firms had co-founded USDC, which was launched under the Centre Consortium. This consortium provided governance for the token. Both Circle and Coinbase benefited from a revenue-sharing arrangement derived from the interest income generated by the reserves that backed USDC.
However, recent updates indicate changes to the agreement. A jointly-authored blog post by Circle CEO, Jeremy Allaire, and Coinbase CEO, Brian Armstrong, stated: "Centre will no longer exist as a stand-alone entity. Circle will now integrate all Centre governance and operations, making it the sole issuer of USDC". Furthermore, they confirmed that while the revenue generated from interest on USDC's dollar reserves will still be divided between Circle and Coinbase, the revenue split will now be equal.
Previously, the agreement between Coinbase and Circle focused on revenue sharing based on USDC holdings, as well as each company’s individual statistics related to minting and distribution. Yet, in Allaire's words, the new arrangement will place a greater emphasis on holdings, encompassing even those in third-party DeFi wallets.
The same blog post also disclosed that USDC will be launched on an additional six blockchains by the end of October. These networks, however, remain unnamed. With these additions, USDC will be accessible across 15 distinct networks. In September, Circle announced that they would be expanding in 2023 to include Polkadot, Near, Optimism, and Cosmos. After that, Coinbase launched its own blockchain project, dubbed Base.
While the exact scale of Coinbase's stake in Circle hasn't been publicly shared, Allaire has clarified that it remains a minority stake, ensuring that Circle retains majority control over the project's trajectory.
Prior to this, Circle launched a EUR-based stablecoin and worked on cross-chain capabilities and programmable wallets to make USDC more appealing to developers.
At the time of writing, USDC's market valuation was slightly under $26 billion, making it the second-largest stablecoin behind Tether. Tether's USDT token is worth around $83 billion at the moment.
Brian Armstrong Jeremy Allaire
