Circle will take on full operational and governance responsibility after five years, thanks to increased regulatory clarity.
Coinbase and Circle have redefined their relationship, according to identical announcements on the Coinbaseand Circle blogs on Aug. 21. The two organizations jointly launched the USD Coin (USDC) stablecoin and have until now governed the token through the Centre Consortium.
The Centre Consortium “will no longer exist as a stand-alone entity,” the blog past said, and governance and operations will be handled in-house. Circle will have enhanced responsibilities, including holding smart contract keys and regulatory compliance.
The crypto firms attributed the move to increased regulatory clarity:
“Circle and Coinbase […] Have agreed that with growing regulatory clarity for stablecoins in the U.S. and around the world, the requirement of a separate governance body like Centre, is no longer needed.”
Circle co-founder and CEO Jeremy Allaire said in an X (formerly Twitter) thread that Circle and Coinbase “are extending and deepening our commercial relationship, with Coinbase taking an equity stake in Circle.” No value was stated for the Coinbase share.
The new arrangement will increase the firms’ strategic and economic alignment, the blog posts noted. Interest revenue will continue to be shared between them based on their holdings of the stablecoin.
Circle and Coinbase launched USDC together in 2018. According to CoinGecko, USDC is the second largest stablecoin by market cap, at $26 billion, with Tether (USDT) ahead of it with a market cap of $83 billion. Circle has been bracing for the introduction of PayPal’s new stablecoin, PYUSD, which was launched on Aug. 7.
— Jeremy Allaire (@jerallaire) August 21, 2023
The blog posts also announced that USDC will launch on six new blockchains in September and October. It did not specify the new blockchains, but USDC’s expansion onto Polkadot, Optimism, Near, Arbitrum and Cosmos was announced in September.