• Coinbase has recently increased its involvement in the USDC stablecoin project by buying a stake in Circle, the issuer of the coin.
• Initially, Coinbase only acted as a distributor and promoter of the project while Circle provided most of the resources.
• The new agreement between Coinbase and Circle will focus on holdings on third-party DeFi wallets rather than business operations.
Coinbase Buys Stake in USD Coin Issuer
Coinbase has taken a more hands-on approach to its collaboration with USDC stablecoin issuer Circle by buying a stake in the company. The size of Coinbase’s investment remains undisclosed, but market capitalization for USDC has grown from $500 million to over $26 billion since its launch five years ago.
Initial Collaboration Between Coinbase and Circle
At first, their partnership was limited to Coinbase acting as distributor and advocate for the project while Circle supplied most of the resources needed. They previously agreed to split revenue based on ownership stakes and other factors related to minting and distribution.
New Agreement with Greater Focus on Third-Party DeFi Wallets
The two companies have now entered into a new agreement where there will be greater emphasis placed on holdings—particularly those located on third-party DeFi wallets—with less attention devoted to business operations. This announcement came shortly after Centre Consortium disbanded due to it being unnecessary for negotiations between Coinbase and Circle having been completed already.
Competition With Tether’s USDT and PayPal
USDC is currently competing with Tether’s USDT stablecoin as well as PayPal’s recently launched digital currency for market share supremacy. Despite this competition, both companies are confident that their collaboration will continue to thrive due to their commitment towards maintaining and promoting USDC together.
Through this move, Coinbase demonstrates a greater interest in expanding its control within the cryptocurrency space by taking an active role in USDC’s development through investing part of their funds into acquiring a stake in Circle’s issuer company.