Cryptocurrency exchange and brokerage giant Coinbase has provided a major stamp of approval to one of several recently launched USD-pegged cryptocurrency “stablecoins” seeking to supplant tether (USDT) as the leader in this burgeoning market niche.
The San Francisco-based Coinbase on Tuesday announced that beginning today, customers can buy, sell, send, and receive USD Coin, the cryptocurrency initially launched by fellow cryptocurrency unicorn Circle.
Coinbase customers throughout the world can send and receive the token, which is backed by physical dollars stored in company-controlled bank accounts, while U.S. customers — excluding those in New York — can buy and sell the token on Coinbase.com. USDC is not currently listed on Coinbase Pro — the firm’s order-book cryptocurrency exchange — though the company says it will be added to this platform “in the coming weeks.”
Commenting on its decision to support the USDC stablecoin, Coinbase said that fiat-based blockchain currencies could contribute to the development of “a more open financial system” and could further the adoption of decentralized applications (dApps):
“The advantage of a blockchain-based digital dollar like USDC is easier to program with, to send quickly, to use in dApps, and to store locally than traditional bank account-based dollars. That’s why we think of it as an important step towards a more open financial system.”
Coinbase also noted that stablecoins like USDC are ideal for business purposes and e-commerce applications, as payments denominated in these tokens can be made at any time of day without the inherent risks of price volatility associated with using bitcoin and other cryptocurrencies as working capital.
At present, though, stablecoins are primarily used as a USD proxy in cryptocurrency trading. Collectively, fiat-pegged assets see more than $2 billion in daily trading volume, with the vast majority of those trades currently denominated in the controversial tether token.
In adding support for USDC, Coinbase joins Circle as a founding member of the CENTRE Consortium, which governs the development of issuance of USD Coin and other stablecoins that the consortium may develop in the future.
According to the announcement, Coinbase had already partnered with Circle to build the underlying technology behind USDC, which is structured as an ERC-20 token on the Ethereum network, though the full extent of Coinbase’s involvement had not previously been made public.
In launching USDC through a partnership with Coinbase, Jeremy Allaire, co-founder and CEO of Circle, emphasized the importance of creating an asset that has no single owner or issuer.
“Coinbase joining us to co-found CENTRE and launch USDC reinforces the value of a shared, standard, interoperable stablecoin. Like internet standards, USDC is now not owned by one single company, but distributed among network participants according to clear rules, regulations, and collectively-owned software,” he said. “When we began work on CENTRE and USDC last year, we envisioned collaborating with a consortium of industry leaders to set new standards for global value exchange and financial contracts. We’ve been thrilled to collaborate with Coinbase on CENTRE, and we look forward to welcoming more partners who share this vision.”