A post by Coinbase on August 22 outlines how the exchange and Circle, the issuer of USDC, have crafted a strategic plan to 'enhance USDC's functionality and fuel ecosystem growth.'
Coinbase has apparently poured funds into Circle Internet Financial, which is the mastermind behind the second most popular stablecoin. Though the specifics of the transaction haven’t been shared, this alliance is set to revolutionize the stablecoin arena and their management methodologies. The Center Consortium, initially founded by Circle and Coinbase for USDC governance and issuance, will be terminated under this new agreement, placing Circle in full command of USDC’s attributes.
More Support for USDC
The revised framework is designed to smooth operations and governance, heightening Circle's direct accountability as an issuer, ensuring control over smart contracts, reserve governance compliance, and enabling USDC on additional blockchains.
To wit,
Furthermore, both parties have decided to work together in sharing profits accrued from USDC collateral holdings. The profit distribution is pegged to the specific USDC volumes each party retains.
Adding to this partnership highlight, Circle has rolled out plans to integrate USDC into six fresh blockchains through September and October 2023. Previously, USDC has made its mark on blockchains such as Algorand, Arbitrum, Avalanche, Ethereum, Flow, Hedera, Solana, Stellar, and TRON, boasting an overall circulating volume of $26.1 billion.
This expansion endeavor is poised to broaden USDC's reach, introducing it to a vast array of platforms and users.
Coinbase's investment in Circle signals strong support for USDC, underscoring its view of USDC as not only a reliable stablecoin but an essential component for crypto’s forward trajectory.
The mutual profit-sharing between Coinbase and Circle underscores their joint commitment to USDC’s integrity, beneficial for both the coin's users and the broader crypto sphere.
Heightened Rivalry Among Stablecoins
Coinbase attributed its recent USDC investment to the evolving clarity in regulatory landscapes.
As stablecoins become subject to tighter regulations, they might turn more appealing to large companies eager to maintain regulatory compliance. PayPal, the world's foremost payment company, has even launched PYUSD, its novella stablecoin on Ethereum.
The stablecoin market is seeing intensifying rivalry as numerous participants aim to stake a claim. Presently, the most prominent stablecoins include USDT, USDT, DAI, BUSD, and TUSD. Last year, the space encountered significant turbulence with the unforeseen unraveling of terraUSD (UST), prompting debates about the very 'stability' of stablecoins.
However, with regulations increasing globally, stablecoins might be more enticing options for major enterprises craving compliance.
Tether (USDT), acclaimed as the top stablecoin, disclosed a $1 billion profit over this year's second quarter. This marks a 30% uptick from the previous term. Nonetheless, they have not unveiled exact calculations on interest. This substantial profit primarily stems from Tether's investment in US Treasury bills.
The second quarter painted a mixed financial picture for Tether. In June, a bout of negative publicity surfaced due to disclosed documents from a 2021 New York state government lawsuit.
These documents disclosed that Tether previously retained sizable amounts of commercial paper from Chinese businesses. This revelation brought to light doubts about Tether's reserve quality and its dollar-pegging capacity.
Earlier this month, Tether announced ceasing further stablecoin issuance on Omni, Bitcoin Cash, and Kusama, attributing this choice to lacking long-term strategic applications. Users are granted a 12-month window to liquidate USDT on these platforms.
Nicholas Say hails from Ann Arbor, Michigan, and has enriched his life with travels, extended Uruguay stays, and currently, life in the Far East. His writings span the digital realm, with a focus on pragmatic advancements and future human-tech innovations.
