Yesterday Binance, the world’s largest cryptocurrency exchange, announced a ‘strategic partnership’ with stablecoin issuer Circle. It’s not the most obvious tie ups for a couple of reasons. Circle is the issuer of the world’s second largest stablecoin, USDC, with a market capitalization of $41 billion.
Many stablecoins have been associated with particular cryptocurrency exchanges. Circle’s USDC is Coinbase’s stablecoin because the two companies founded the stablecoin together via the Centre Consortium, which has since been disbanded. Coinbase has a stake in Circle and still receives interest on the stablecoin’s reserves. In the nine months to September 30, Coinbase earned $685 million from USDC, around 17% of its revenues. So in theory Binance’s use of USDC will provide profits to its largest competitor. That’s probably not the case in practice, which we’ll come back to.
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