Yesterday USDC stablecoin issuer Circle announced fundamental changes in USDC governance. Previously, the stablecoin was governed by the Centre consortium, which until now only consisted of Circle and Coinbase as members. Centre is being disbanded and governance will rest with Circle alone. Additionally, Coinbase has invested in Circle, and will continue to earn interest on the reserves, with Coinbase possibly earning more than Circle.
In many ways, the agreement is a formalization of what was already the case – Circle has been substantially managing USDC on its own. Going forward, the companies are likely to compete with each other in multiple ways. For example, Circle launched a wallet as a service solution and Coinbase offers something similar. BlackRock has collaborations with both firms.
The cosy relationship between stablecoins and particular exchanges has already attracted attention from regulators and has been observed by the Bank for International Settlements (BIS) on multiple occasions. And Paxos was instructed to cease issuing Binance USD.
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