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Coinbase Acquires Stake in USDC Issuer Circle

Coinbase has acquired an undisclosed amount of stake in stablecoin issuer Circle Internet Financial. In addition, the two companies have mutually agreed to wind down the Centre Consortium, the self-governance consortium for USDC.  Furthermore, Coinbase and Circle have reached an agreement that will affect how the project is managed and funded.

A look at the new changes

Prior to this change, Coinbase and Circle had an arrangement wherein they would split their USDC holdings and distribution statistics-based profits. The new agreement, however, will place more emphasis on the partners’ assets, including those stored in third-party DeFi wallets, rather than their transactions.

Circle, in its role as issuer, will be held directly accountable under the new framework, which will facilitate the use of USDC on more blockchains and streamline operations and governance.

Analysts say the new arrangement reflects the changing economics and popularity of USDC, particularly in light of the unstable global regulatory climate and the advent of competing stablecoins such as Tether (USDT) and PayPal USD.

As per the previous agreement, Circle and Coinbase had a revenue-sharing arrangement, with the split determined by the total amount of USDC stored on each platform and the total amount of USDC supplied by each company. In the new deal, both parties would share equally in interest income from any USDC kept outside of either platform, although revenue will still be divided according to the proportion of USDC held on each platform.

Circle will continue to be the issuer of USDC, while the Centre Consortium will cease to exist as an independent company. This will allow Circle to assume responsibility for the management and administration functions previously held by Centre. In addition, by the end of October, USDC will be live on a total of 15 networks, having launched on six new blockchains.