Leading crypto exchange Coinbase is buying a minority stake in Circle Internet Financial. Companies are dissolving the Central Consortium that manages the USDC stablecoin and bringing the Circle stablecoin fully in-house. Also, six new Blockchains will be integrated with USDC, bringing the total number to 15.
Coinbase buys minority stake in Circle
Cryptocurrency exchange Coinbase is buying a minority stake in Circle Internet Financial. In addition, companies are dissolving the Center Consortium partnership, which issued the world’s second largest stablecoin, USD Coin (USDC). As part of this move, Circle will move the issuance and management of USDC fully in-house. Additionally, six more Blockchains will add native support for USDC. Thus, the total number of supported Blockchains will increase to 15.
Coinbase and Circle did not disclose in a blog post how large a stake Coinbase had acquired. They also did not specify which of the six additional Blockchains they would be. However, in September, Circle said it plans to add Polkadot, Near, Optimism, and Cosmos in 2023. After that cryptocoin.comAs you follow, it has established its own Blockchain called Coinbase Base.
Tectonic changes are happening in the stablecoin world!
There have been tectonic shifts in the world of dollar-pegged stablecoins lately. Finally, fintech giant PayPal introduced its own PYUSD token, along with Paxos. Thus, it took a step to shake the dominance of Tether’s USDT and USDC. It’s possible for PayPal to be a strong competitor, given its deep ties to payments and remittances.
According to Phil McDonnell, senior manager of product management at Coinbase, from Coinbase’s perspective, the future of USDC extends far beyond crypto trading, into areas such as foreign exchange, cross-border fund transfers and financial inclusion. But he doesn’t underestimate any competition with PayPal.
PayPal’s PYUSD ‘big the pie’
Phil McDonnell said in an interview, “I truly believe PayPal has grown the cake for us. Crypto is tiny compared to the general financial world today. “So whether they come through the PayPal door or another door, many people will eventually find their way into other things in crypto, including us at Coinbase.”
Dante Disparte, Circle Chief Strategy Officer and Head of Global Policy, says regulation of stablecoins remains in the early evolution stages, but there are scraps of clarity emerging. He pointed to Clarity for the Payments Stablecoins Act of 2023, passed on a bipartisan basis in the US Congress. Disparte also points out that Circle has recently obtained a Major Payment Institution License in Singapore. Disparte also highlights the following:
We are just not at a point where we can retire the Center Consortium. It also makes sense from a patent standpoint to do so because of market clarity around the regulation of stablecoins. Big companies like PayPal are getting into the game. Also, there is enough clarity, if not a better term, to abandon a stablecoin self-regulating organizational structure.
The crypto world is expanding as Coinbase makes new moves!
Circle also sold shares last year, raising $400 million from a group that includes asset managers BlackRock and Fidelity Investments. Both have made a splash recently by attempting to issue spot Bitcoin ETFs. Meanwhile, Circle announced last month that it is cutting some of its workforce in an effort to build a strong balance sheet and focus on core business activities.
The blog post reads, “Coinbase and Circle USDC reserves will continue to generate revenue from interest income. According to the new arrangement of the parties, this income will be shared according to the amount of USDC held on each of our platforms. We will also now equally share the interest income from the wider distribution and use of USDC.” gives the description.
