Crypto exchange giant, Coinbase, unveiled on Monday its plans to fortify its support for stablecoins by securing an equity stake in Circle, another major player in the crypto space.
The two companies shared the development in a joint blog post, announcing Circle’s newfound responsibility over USDC issuance and governance.
As part of this evolution, the stablecoin is set to make its debut on six new blockchains. The specific terms of Coinbase’s investment remain undisclosed.
“Coinbase and Circle will now jointly share a stronger strategic and economic vision on the shaping of the financial future,” said Brian Armstrong, Coinbase’s CEO, and Jeremy Allaire, CEO of Circle, in a joint statement.
The anticipated launch of USDC on the newly supported blockchains is scheduled to happen between September and October.
Reiterating their commitment to the prosperity of the stablecoin ecosystem, particularly USDC, both companies highlighted the continuous generation of revenue from USDC reserves interest income.
They said, “Under this new partnership, the revenue stream will persist based on the volume of USDC on both platforms. Moreover, we will now mutually benefit from the interest income emanating from the wider distribution and utilization of USDC.”
Coinbase, earlier this month, disclosed its Q2 financials, reporting $151 million generated from USDC stablecoin interest income.
This figure saw a decrease from $199 million in the prior quarter, with a 28% reduction in USDC’s market cap cited as a factor influencing this downturn.
Nevertheless, the company was quick to assure its stakeholders on Twitter that its recent acquisition of Circle and the subsequent alterations in USDC governance won’t interfere with the financial forecast declared during its Q2 report.
In a somewhat related development, traditional payments titan, PayPal, proclaimed its intentions to launch its very own stablecoin.
Collaborating with Paxos, the new stablecoin, labeled PYUSD, will find its foundation on the Ethereum blockchain. According to PayPal, the PYUSD stablecoin will be “comprehensively backed by U.S. dollar deposits, short-term Treasuries, and analogous cash equivalents.” However, the market’s reaction to PayPal’s announcement was a cocktail of various sentiments.
