“The nature of the investment means that Coinbase and Circle will now have even greater strategic and economic alignment on the future of the financial system,” the CEOs of the two companies said in a joint statement Monday (Aug. 21). “Coinbase is committed to the long term success of the stablecoin ecosystem and USDC, specifically.”
Also in the post, the companies said they would shut down Centre Consortium, their shared self-governance group for USDC launched five years ago.
At that time, Circle CEO Jeremy Allaire wrote on Twitter Monday, there were no clear regulations for operating stablecoins safely.
“Now, with regulatory clarity coming for stablecoins all around the world, including in the U.S., there’s no longer the need for such a structure,” he said. “But meanwhile, USDC has become a foundational pillar of the on-chain economy, and a significant business for both companies.”
Under the new arrangement, Circle will continue managing USDC, which is due to launch on six new blockchains between September and October, bringing USDC’s multi-chain access to 15.
The new arrangement comes during a time of uncertainty for the crypto sector, as PYMNTS wrote last week, with a number of companies – Coinbase included – facing regulatory action.
It’s also happening as parties on both sides of the aisle debate the best way to handle regulation of stablecoins, which are cryptocurrencies pegged to government-backed currencies on a one-to-one ratio.
Earlier this month, Rep. Maxine Waters, the ranking Democrat on the House Financial Services Committee, said she was “deeply concerned” about PayPal’s decision to launch a stablecoin, noting there is no federal framework for regulating these assets.
“PayPal, with 435 million customers globally, exceeds the number of online accounts at all of the megabanks combined,” Waters said in the release. “Given PayPal’s size and reach, federal oversight and enforcement of its stablecoin operations is essential in order to guarantee consumer protections and alleviate financial stability concerns.”
Her comments contrasted with those of Rep. Patrick McHenry, the committee’s Republican chairman, who praised PayPal’s launch of a stablecoin.
“This announcement is a clear signal that stablecoins — if issued under a clear regulatory framework — hold promise as a pillar of our 21st-century payments system,” McHenry said in a news release. “Clear regulations and robust consumer protections are essential to enabling stablecoins to achieve their full potential.