Coinbase and Circle Revamp Partnership Following Identical Blog Announcements on August 21st
Coinbase and Circle have undertaken a transformative restructuring of their collaboration, as disclosed in synchronized blog posts on August 21st on both companies’ official websites. These two entities had previously collaborated on the creation and management of the USD Coin (USDC), a stablecoin pegged to the value of $1.00, with the token’s governance falling under the purview of the Centre Consortium.
In a significant shift, the Centre Consortium will no longer operate as an independent entity, as explained in the blog posts. Instead, internal teams within Coinbase and Circle will take over the responsibilities for governance and operations. Circle will assume an expanded role, encompassing key tasks such as managing smart contract keys and ensuring regulatory compliance.
This strategic reevaluation was prompted by the evolving landscape of regulatory frameworks for stablecoins, both in the United States and globally. The regulatory clarity achieved has led Circle and Coinbase to conclude that a separate governing body like the Centre Consortium is now redundant.
Jeremy Allaire, co-founder and CEO of Circle, elaborated on this decision in a thread on the X platform (formerly Twitter). He emphasized that this shift marks an extension and intensification of the business relationship between Circle and Coinbase, with the latter acquiring an equity stake in Circle. However, specific details regarding the valuation of the Coinbase equity stake were not disclosed.
The revised arrangement between these cryptocurrency companies is poised to enhance their strategic alignment and economic cooperation, as highlighted in the shared blog posts. The existing arrangement for sharing interest revenue, based on their respective holdings of the USDC stablecoin, will remain in place.
In a collaborative effort, Circle and Coinbase introduced USDC in 2018. As reported by CoinGecko, USDC currently holds the position of the second-largest stablecoin in terms of market capitalization, standing at $26 billion. It follows Tether (USDT), which maintains a market cap of $83 billion and is pegged at $1.00.
Circle has been preparing for the arrival of PayPal’s recently launched stablecoin, PayPal USD (PYUSD), which made its debut on August 7th.
The blog entries also revealed plans for USDC’s expansion onto six additional blockchains in the upcoming months of September and October. While the specific blockchains were not outlined, it’s worth noting that USDC’s forthcoming expansion onto platforms such as Polkadot, Optimism, Near, Arbitrum, and Cosmos had been previously disclosed in September.