Founded in 2018 through a joint venture called Centre Consortium, Coinbase and Circle were originally co-governors of USDC.
However, that structure was dissolved in 2023, giving Circle full control of the stablecoin’s governance while granting the exchange an equity stake and a favorable revenue-sharing arrangement.
Based on Circle’s S-1 filing, Coinbase and the stablecoin issuer split residual revenue 50/50 from reserves backing USDC. However, when USDC is held directly on Coinbase’s platform, the exchange receives 100% of that revenue.
This revenue stream has grown in significance, as Coinbase’s recent earnings show a notable uptick in income derived from USDC-related activity.
The agreement also includes stipulations limiting Circle’s ability to enter into major new USDC-related partnerships without Coinbase’s consent and grants Coinbase partial IP control in the event of Circle’s insolvency.
These provisions suggest a level of interdependence that has led some insiders to view the companies as practically inseparable. A banker familiar with the talks told Fortune that if Coinbase expressed any intention of acquiring the firm, “Circle would sell in a heartbeat.”
According to its first-quarter XRP Markets Report, Ripple held 4.56 billion XRP, valued at approximately $11.8 billion, on its balance sheet and an additional 37.13 billion XRP (around $95.7 billion) in escrow as of March-end.
Coinbase, which had $8 billion in cash as of its last quarterly filing, has already completed several acquisitions this year, including crypto derivatives exchange Deribit for $2.9 billion and the onchain ads platform Spindle.
Coinbase CEO Brian Armstrong has stated that Coinbase is constantly evaluating M&A opportunities but remains selective due to the complexity of integration.
As of now, Circle remains committed to going public, but one private equity executive told Fortune that the situation could evolve as things are changing “week by week.”
