Last Updated on August 22, 2023 by Bitfinsider

Coinbase announced Monday that it is expanding its support for stablecoins by “taking an equity stake” in Circle.

Circle will take complete management of USDC issuance and governance as part of an agreement disclosed in a joint blog post. According to the release, the stablecoin would be launched on six different blockchains.

“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,” said Coinbase CEO Brian Armstrong and Circle CEO Jeremy Allaire in a joint statement.

USDC will be available on the new blockchains between September and October, according to the firms.

“Coinbase is committed to the long-term success of the stablecoin ecosystem, particularly USDC,” they added, adding that both companies will continue to generate revenue from USDC reserves interest income.

“Under the parties’ new agreement, this revenue will continue to be shared based on the amount of USDC held on each of our platforms, and we will now share equally in interest income generated from the broader distribution and usage of USDC,” they added.

Coinbase said earlier this month that it earned $151 million in USDC stablecoin interest income during the second quarter. This was a decrease from the previous quarter’s interest income of $199 million. A 28% decline in USDC market valuation, according to Coinbase, was a significant factor.

Coinbase stated on Twitter that purchasing a stake in Circle and modifying the governance of USDC will not have an impact on the financial prognosis provided when the business released its second quarter earnings.