Coinbase announces investment in Circle to better support stablecoins

Coinbase has announced that it is strengthening its alliance with Circle through an investment. The purpose is to support USDC in a better manner. This will begin with launching the stablecoin on 6 more blockchains between September and October this year. The development was published by Brian Armstrong, the Chief Executive Officer of Coinbase. He has assured that both parties will simultaneously continue maintaining a commercial relationship.

USDC was launched 5 years ago. It now demonstrates the success that digital tokens can achieve. Needless to say, this is given when regulatory compliance is clear across the world. USDC is currently pegged to the USD in 1:1. This helps the stablecoin to mitigate the risk factor, lower volatility, and onboard a larger number of users.

Most of them have been able to enter the digital ecosystem for the first time through USDC. It has enabled them to shift to the US Dollar and/or swap their holdings for another cryptocurrency. This includes BTC and ETH, among other digital tokens.

With the investment in place, Coinbase has highlighted that Circle will take the responsibility to issue and govern USDC in the ecosystem. Going live on multiple blockchains is expected to help USDC gain broader recognition, expand its reach, and enable access to multiple chains. It will largely serve the community of developers along with applications and businesses. A tentative roadmap about which blockchain will go live and when has not been made public yet.

Coinbase investing in Circle for USDC has been termed the next chapter in the partnership between them. 

Meanwhile, the announcement has stated that Center Consortium is not required any longer. Hence, it will cease to be a stand-alone entity. The Center was founded by Coinbase and Circle as a self-governance consortium specifically for USDC. Circle will now be the issuer of the stablecoin to bring both activities in-house.

It will help streamline operations, enhance direct accountability, and review governance effectively.

The investment in Circle grants Coinbase equity in it. This helps them to continue earning a fair share of the revenue from USDC reserves interest income. The distribution of the revenue will be based on how much USDC each party holds in their respective accounts. The higher the share, the more the revenue for, say, Circle.

Both will also share interest income equally under the new agreement, provided it has been generated from the usage and distribution of USDC.

What prompted Coinbase and Circle to strengthen their association with USDC is the belief that the stablecoin will open a more inclusive ecosystem for people across the world. They are, therefore, now looking forward to unlocking more utilities of USDC by growing its circulation and adoption.

Investment in Circle done by Coinbase aligns with the intention of powering the future of the financial infrastructure. Brian Armstrong has assured the community that they are committed to achieving long-term success through USDC and the entire ecosystem of stablecoins.

Trevor Holman

Trevor Holman follows crypto industry since 2011. He joined CryptoNewsZ as a news writer and he provides technical analysis pieces and current market data. He is also an avid trader. In his free time, he loves to explore unexplored places.

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