Coinbase and Circle have announced a strategic restructuring of their partnership, ushering in a new chapter in the governance of the US Dollar Coin (USDC). In a joint blog post on August 21, 2023, the two companies unveiled a set of new terms that would reshape the governance and funding dynamics of USDC.
Under this new arrangement, Centre Consortium, the body responsible for managing USDC, would be dissolved, and Circle will take full responsibility for the stablecoin.
Though Circle is the issuer of the USDC stablecoin, Centre Consortium was founded and managed by Circle and Coinbase to govern the stablecoin issuance and management. The decision to shut down the consortium was attributed to the evolving regulatory landscape for stablecoins globally, particularly in the United States.
According to the official statement:
“The new structure will streamline the operations and governance, and enhance the direct accountability of Circle as the issuer, including holding all the smart contract keys, complying with regulations on governance of reserves and enabling USDC on new blockchains.”
Also, as part of the new arrangement, Coinbase acquired an equity stake in Circle. Both companies will still maintain a commercial partnership that will see them continue to generate revenue from interests on USDC reserves and share it based on the amount of the stablecoin held on their platforms.
In addition to these changes, both companies revealed plans to expand USDC’s reach across six additional blockchain networks between September and October 2023. They, however, did not disclose the specific names of these blockchain networks. If executed, this move would increase USDC’s multi-chain support to 15.
USDC, with a market cap of about $26 billion, is the world’s second-largest stablecoin, trailing only Tether (USDT). Coinbase and Circle expect the new governance structure to spur the stablecoin’s growth and further unlock its potential.
“Together, we look forward to unlocking additional value by growing the USDC ecosystem, circulation and global adoption,”
the companies jointly expressed in their statement.
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