In light of this development, Circle will take over the complete issuance and governance of USDC in-house. Additionally, USDC will be natively supported on six more blockchains, expanding the total number of supported blockchains to 15. Even though specific details about the additional blockchains have not been disclosed, Circle had previously mentioned plans to include Polkadot, Near, Optimism, and Cosmos in 2023. Coinbase has also introduced its own blockchain called Base.
The exact size of Coinbase’s stake in Circle has not been revealed, and no cash exchange took place between the two companies for this stake according to coindesk.com.
PayPal, an important player in the fintech sector, introduced its own PYUSD token in collaboration with Paxos in a bid to challenge Tether’s USDT and USDC. Coinbase envisions the potential of USDC extending beyond crypto trading, into domains such as foreign exchange, cross-border fund transfers, and financial inclusion. Coinbase officials cited by coindesk.com downplayed any rivalry with PayPal, emphasising the growth of the crypto industry as a whole.
The state of stablecoin regulation in the US
Regulation of stablecoins is in its early stages of evolution, but certain legislative initiatives have emerged, such as the Clarity for Payment Stablecoins Act of 2023, which has garnered bipartisan support in a key US House of Representatives committee. Circle’s officials highlighted these developments and also noted that Circle recently obtained a Major Payment Institution License in Singapore.
The decision to retire the Centre Consortium aligns with the emerging regulatory clarity for stablecoins, especially in the wake of significant players such as PayPal entering the market. Circle had previously raised USD 400 million through stake sales, involving investors such as BlackRock and Fidelity Investments, both of which have shown interest in issuing spot bitcoin ETFs.
Circle’s recent focus on streamlining its workforce and concentrating on core business activities has been exemplified by an announcement in July 2023. Coindesk reports that the partnership between Coinbase and Circle will continue to generate revenue from interest income derived from USDC reserves. This revenue-sharing arrangement will be based on the amount of USDC held on each platform, and will now extend to encompass interest income from the wider distribution and use of USDC.
Other developments from Coinbase
In August 2023, Coinbase secured regulatory approval from the National Futures Association to offer access to eligible US customers to crypto futures.
Considering this development, Coinbase is on track to becoming the first crypto-native company to directly offer traditional spot crypto trading together with regulated and leveraged crypto futures, on an integrated trading solution for their verified customers. Through the access to CFTC-regulated crypto derivates market, broader participation in the crypto economy will be enabled, therefore leading to significant growth.
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