Coinbase's acquisition of a minority stake in Circle Internet Financial has resulted in the dissolution of Centre Consortium.
Coinbase Acquires Minority Stake In Circle
Coinbase's acquisition of a minority stake in Circle Internet Financial has resulted in the dissolution of Centre Consortium, which is responsible for issuing the second-largest stablecoin, USD Coin (USDC).
The announcement, made through a joint blog post by Circle CEO Jeremy Allaire and Coinbase CEO Brian Armstrong, outlined that the revenue generated from interest on the dollar reserves backing USDC tokens will now be evenly split between the two companies. Circle would continue to be the only issuer of USDC while taking over the management and operating duties of Centre.
The consortium was first established in 2018 by Coinbase and Circle with the goal of governing the U.S. dollar-pegged coin, welcoming additional market players as possible USDC issuers. With this modification, Circle will be the only one to issue USDC stablecoin.
In addition, the blog post revealed intentions for USDC to join six other blockchains by the end of October, bringing its total number of networks up to nine. With a market cap of about $26 billion, USDC is currently the second-largest stablecoin behind Tether's USDT, which has a market cap of $82.8 billion.
Stablecoins like USDC are backed by reserves of fiat currency, primarily U.S. dollars, and are redeemable at a 1:1 ratio. Circle holds these reserves, which can include government notes like Treasury Bills, to ensure the stability of the token.
For the second quarter, Coinbase recorded revenue of nearly $700 million. The corporation includes earned interest from USDC reserves in its income stream, indicating how its revenue streams have changed after its initial public offering (IPO) in 2021.
