Coinbase, a prominent cryptocurrency exchange, is solidifying its ties with Circle, the issuer of the USDC stablecoin, marking a significant step in their collaboration within the crypto landscape.
The strategic partnership between Coinbase and Circle also involves the decision to dissolve the Centre Consortium, a private governing entity responsible for overseeing the USDC stablecoin. This move reflects the duo’s confidence in achieving “regulatory clarity” regarding stablecoins.
Coinbase announced its intention to strengthen its commitment to the stablecoin ecosystem by acquiring an equity stake in Circle. This investment underscores their shared vision for the future of the financial system, further aligning their strategic goals.
The USDC stablecoin faced a challenge when its value dipped below its $1 peg due to the fallout of Silicon Valley Bank (SVB), a significant lender to the tech sector. Circle held a substantial portion of its cash reserves with SVB. The situation was resolved after U.S. regulators took control of SVB’s deposits and worked towards restoring normalcy.
Circle introduced its own U.S. dollar-backed stablecoin in 2018, playing a pivotal role in the $124.1 billion stablecoin market. Currently accounting for about 21% of the stablecoin market, USDC has a circulating value of over $26 billion. Tether dominates the stablecoin sector with a market capitalisation of $82.8 billion, claiming nearly 67% of the market share.
The Centre Consortium was established by Circle in 2018 to guide stablecoin policy, a critical component of the cryptocurrency ecosystem enabling seamless trading without involving traditional banking systems.
Recognising the evolving regulatory landscape, Circle’s strategic moves include Coinbase’s equity involvement, the Centre Consortium’s closure, and plans to launch USDC on six new blockchains between September and October.
Although unspecified, the expansion of USDC onto new blockchains will increase its availability on 15 blockchains overall. This expansion aims to bolster USDC’s engagement with global developers and enhance its momentum in the cryptocurrency sphere.