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  • Coinbase is securing a partial ownership in Circle Internet Financial through a minority stake acquisition.
  • The dissolution of the Center Consortium, the governing body of the USDC stablecoin, is underway, as Circle takes complete control of the stablecoin within its own operations.
  • Six additional blockchains are set to incorporate USDC, bringing the total count to 15. While specific details are not provided, Circle has revealed its intentions to include Polkadot, Near, Optimism, and Cosmos as part of this expansion in 2023.

 

Coinbase (COIN), a prominent cryptocurrency exchange, is set to acquire a partial ownership in Circle Internet Financial. As a result of this arrangement, the two companies have decided to conclude their partnership within the Centre Consortium. This consortium was responsible for the creation of USD Coin (USDC), which stands as the second-largest stablecoin globally.

As a component of this transition, Circle will take complete control over the issuance and management of USDC in-house.

Moreover, an additional six blockchains are set to incorporate built-in compatibility with USDC, a stablecoin tethered to the value of $1, elevating the overall count of supported blockchains to fifteen.

In a blog post and discussions with CoinDesk, Coinbase and Circle refrained from revealing the exact magnitude of the stake acquired by Coinbase. It's worth noting that the stake was not obtained by Coinbase through a monetary transaction, as confirmed by a source familiar with the situation.

Coinbase and Circle were unable to ascertain the identities of the six extra blockchains. (In September, Circle had announced its intentions to integrate Polkadot, Near, Optimism, and Cosmos in 2023. Following that, Coinbase initiated the development of its own blockchain named Base.)

In the realm of dollar-pegged stablecoins, significant shifts have emerged as of late. The latest development involves the prominent fintech company, PayPal, which has entered the scene to challenge the prevailing influence of Tether's USDT and USDC. This endeavor comes in the form of their newly introduced PYUSD token, developed in collaboration with Paxos. Given PayPal's extensive connections within the payments and remittances sectors, it has the potential to present a formidable competition.

According to Phil McDonnell, the Senior Director of Product Management at Coinbase, the potential of USDC (USD Coin) extends well beyond cryptocurrency trading from Coinbase's viewpoint. It reaches into realms such as foreign exchange, cross-border fund transfers, and promoting financial inclusivity. However, McDonnell downplays any notion of rivalry with PayPal.

PayPal’s PYUSD ‘grows the pie’

“I really do believe PayPal grows the pie for us,” McDonnell said in an interview with CoinDesk. “Crypto is so small today compared to the overall financial world. And, so, getting a lot of people in, whether they come through the PayPal door, or some other door, a lot of them eventually will find their way to other things in crypto, including us at Coinbase.”

The regulation of stablecoins is still in its nascent phases of development, but glimpses of clarity are beginning to surface, according to Dante Disparte, the Chief Strategy Officer and Head of Global Policy at Circle. He highlighted the emergence of the Clarity for Payment Stablecoins Act of 2023, which has garnered bipartisan backing within a crucial committee of the U.S. House of Representatives. Additionally, Disparte highlighted Circle's recent achievement in obtaining a Major Payment Institution License in Singapore.

“Not only are we at a point where we can retire the Centre Consortium, but doing so makes patent sense because of clarity in the marketplace around regulating stablecoins,” Disparte said in an interview with CoinDesk. “Major companies like PayPal are entering the game and there’s sufficient clarity to abandon what was, for lack of a better term, a stablecoin self-regulatory organization structure.”

BlackRock, Fidelity

In the previous year, Circle also engaged in the sale of ownership interests, successfully securing $400 million from a consortium that featured prominent asset managers such as BlackRock and Fidelity Investments. Notably, both of these entities have garnered attention for their recent endeavors in launching spot Bitcoin ETFs.

In the previous month, Circle revealed its decision to streamline its workforce as part of an effort to uphold a robust financial position and concentrate on essential business operations.

“Coinbase and Circle will continue to generate revenue from USDC reserves interest income,” according to the blog post. “Under the parties’ new arrangement, this revenue will continue to be shared based on the amount of USDC held on each of our platforms, and additionally we will now equally share in interest income generated from the broader distribution and usage of USDC.”