Coinbase Invests In USDC Issuer Circle
USDC Will Expand To Six New Chains; Centre Consortium To Dissolve
By: Samuel Haig •DeFi News
USDC, the second-largest stablecoin by market capitalization, is undergoing big changes.
On Aug. 21, Centre Consortium, the entity overseeing USDC governance jointly operated by Circle and Coinbase, the leading U.S. crypto exchange, said it will soon dissolve.
Coinbase is purchasing an equity stake in Circle, with Circle set to assume all of Centre’s former responsibilities.
“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,” the announcement said.
“Centre will no longer exist as a stand-alone entity and Circle will remain as the issuer of USDC, bringing any Centre governance and operations responsibilities in-house.”
Coinbase and Circle will continue to earn revenue generated by USDC’s reserve assets. Interest earnings will be divided based on the amount of USDC held on each company’s platform, with the firms evenly splitting profits derived from “the broader distribution and usage of USDC.”
The restructuring comes less than three weeks after Coinbase asked a U.S. court to dismiss the lawsuit brought against the exchange by the SEC in June. The agency claims Coinbase operated as an unlicensed securities exchange.
Coinbase vowed to fight the lawsuit, stating the process could deliver long-awaited regulatory clarity for U.S.-based firms operating with crypto. Coinbase was buoyed in July when Judge Analisa Torres ruled that digital tokens are not considered securities solely on the basis they were sold via a securities investment contract, undermining the argument underpinning the SEC’s complaint.
Coinbase also filed its own lawsuit against the SEC in April for failing to respond to its June 2022 request for the agency to develop clear guidelines for the web3 sector informed by public consultation per its formal rulemaking process.
The news also comes amid a long-term decline in the market capitalization of USDC. The stablecoin’s supply currently sits at $26B after crashing 53% since peaking at $56B last July, according to CoinGecko.
Circle also revealed plans to launch USDC on six new blockchains between September and October, which would bring the number of networks offering native USDC support to 15.
While Circle did not name the chains, the firm announced plans to launch USDC on Arbitrum, Optimism, Polkadot, Cosmos, and Near last October, but has only deployed the stablecoin on Arbitrum since.
Base, the freshly-launched Ethereum Layer 2 from Coinbase, is also a likely contender to host native USDC.