Coinbase Acquires Circle Stake And Dissolves USDC Issuer Center

(CTN News) – A blog post from Coinbase, the company that issues the second-largest stablecoin USDC, has announced that Centre Consortium has been dissolved because Coinbase has acquired a minority stake in Circle Internet Financial.

In a joint blog post, Circle CEO Jeremy Allaire and Coinbase CEO Brian Armstrong pointed out that Centre will no longer exist as an independent entity and that Coinbase will remain as the issuer of USDC, which would bring any governance and operations responsibilities to Coinbase itself.

According to the announcement, revenue from interest earned on the dollar reserves backed by USDC tokens will continue to be split between the two firms, but it will now be on an equal basis.

The USD Coin (USDC) stablecoin is issued by Circle, the largest publicly traded crypto exchange in the world, through Coinbase’s consortium, a separate group that governs the USD Coin (USDC) stablecoin.

The consortium was founded in 2018 by Coinbase and Circle.

It was stated at the time that the consortium was looking forward to “broad industry participation” and that more USDC issuers would be introduced.

As a result, Circle will be the sole issuer of USDC.

USDC will also be launched on six new blockchains by the end of October, although the blog post did not specify which networks it will be launched on. It is anticipated that USDC will be available on 15 different networks, according to the companies.

Currently, USDC is the second most valuable stablecoin by market capitalization, behind Tether, which is just shy of $26 billion. The market capitalization of Tether’s USDT currently stands at $83 billion, according to Coingecko.

In this case, U.S. dollars are used as the backing for the stablecoin. It is possible to purchase tokens for $1 each and then redeem them for dollars at a later date. Meanwhile, Circle maintains the dollar reserves required to redeem all USDC tokens in circulation.

However, the reserves are not entirely made up of cash. Furthermore, stablecoins can also be backed by government notes, such as Treasury Bills, whose yields have increased as the Federal Reserve tries to combat inflation by raising interest rates.

The company reported Q2 earnings of more than $700 million earlier this month. During the run-up to those earnings, analysts noted that the company’s earnings have changed dramatically since its IPO in 2021.

There is a decline in revenue from trading fees during bear markets, when there tends to be less trading activity on the company’s crypto exchange.

Coinbase accounted for a significant portion of its revenue from interest earned on USDC reserves due to its involvement in the Centre Consortium.

It was unclear until today what kind of agreement Circle had with the company.

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