Coinbase has confirmed the acquisition of a minority stake in Circle Internet Financial – issuer of the USDC stablecoin – in a bid to bolster its stablecoin offering.
The cryptocurrency exchange’s stake in the company means that Circle will now dissolve its Centre Consortium deal that issued USDC and now move the issuance of the stablecoin fully in-house.
The acquisition also means that USDC, the world’s second-largest stablecoin, will now be supported by six additional blockchains bringing the figure up to 15, and will give users more optionality when to buy, sell and trade the stablecoin.
Coinbase and Circle jointly launched USDC five years ago and has since gone on to become one of the world’s most popular stablecoins. A statement from the crypto exchange outlined that stablecoins are an important tool to stabilise the crypto sector.
The statement read: “USDC has an essential role in serving the public interest when it comes to updating the financial system. Having established itself as one of the most widely adopted and trusted digital dollars, USDC has enabled millions of users around the world the ability to quickly access and move money at scale.
“The objective of stablecoins is to be usable 24/7, widely available, stable, and backed 1:1 with transparent and safe reserves. USDC is designed with these principles – and today we’re pleased to announce the next chapter in our work together.
“This chapter speaks to our joint belief in the immediate and long term impact of stablecoins and, in particular, unlocking the next phase of utility for USDC.”
The extent of Coinbase’s stake in Circle was not disclosed nor did either company reveal the six additional blockchains that USDC will now be supported by.
Stablecoin interest has gathered significant momentum over the last several months, most notably when PayPal launched its PYUSD token recently becoming one of the first financial services to offer its own native stablecoin.
Whether Coinbase’s recent stake purchase was to help maintain USDC’s popularity in the wake of PYUSD’s rise remains to be seen, but Jose Fernandez da Ponte, SVP of Blockchain, Crypto and Digital Currencies at PayPal, affirmed the company’s stablecoin is not meant to rile up competition, rather increase the pie.
He said: “We don’t think of the goal in terms of competition. We do think that we are still very early in crypto and definitely very early in stablecoins. As of last weekend we see a $120bn (market cap) in stablecoins so we don’t think that is where it stops.”
This was a sentiment backed by Coinbase Senior Director of Product Management Phil McDonnell, who told CoinDesk that the more people get involved in the sector will help grow the overall sector.
He said: “I really do believe PayPal grows the pie for us. Crypto is so small today compared to the overall financial world.
“And, so, getting a lot of people in, whether they come through the PayPal door, or some other door, a lot of them eventually will find their way to other things in crypto, including us at Coinbase.”