Coinbase Exchange, has acquired a minority share in the stablecoin operator Circle. This partnership emerges as both companies take a significant stride by discontinuing their collaboration in the Centre Consortium. This consortium played a pivotal role in the creation of USD Coin (USDC), presently the second-largest stablecoin globally.
An updated arrangement was established on Monday, August 21, as a reaction to regulatory ambiguity and potential rivalry from stablecoins such as Tether and the recently introduced PYUSD by PayPal.
USDC’s Genesis and Evolution
In 2018, USDC was introduced as a stablecoin tied to the US dollar. The goal was to maintain its value at $1. This concept was initially developed by Circle. Subsequently, the stablecoin operator Circle established the Centre consortium to oversee the stablecoin. In preparation for the launch of USDC, Coinbase joined this consortium as a distribution partner.
After its launch, the stablecoin experienced considerable growth, leading to substantial profits for both Coinbase and Circle. Initially, these companies shared revenue proportional to their USDC minting and platform volume.
However, the updated agreement retains the same structure, with one change: interest income from off-platform USDC, like those held in defi wallets, will now be equally shared. This adjustment eliminates the previous focus on the company responsible for the initial USDC minting.
Stabecoin Operator Circle and Coinbase: Growth, Expansion, and Regulatory Resilience
Circle CEO Jeremy Allaire stated that this adjustment would foster a strong alignment for the long-term prosperity of both companies, although specific investment figures were not disclosed.
Coinbase’s expansion efforts continue to show, as seen in a recent significant announcement. On August 14, the company officially entered the Canadian market. This move came with partnerships that encompass Interac payment rails, fund transfers, and Coinbase One.
Despite grappling with regulatory challenges earlier in the year, the company’s ongoing growth and new partnerships suggest that it will take more than an SEC allegation to undermine one of the world’s largest cryptocurrency exchanges.
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