Bold Move: Former Exec Argues Coinbase Must Acquire Circle for USDC Control

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Bold Move: Former Exec Argues Coinbase Must Acquire Circle for USDC Control

Imagine a scenario where one of the biggest players in the crypto world makes a strategic move that could reshape the stablecoin landscape. That’s exactly the potential future outlined by a former executive, suggesting that Coinbase, the leading US crypto exchange, should acquire Circle, the issuer of the second-largest stablecoin, USDC. This bold proposition, shared by Ryan Y Yi, formerly of Coinbase Ventures, highlights the increasing importance of USDC to Coinbase’s bottom line and the strategic advantages of gaining full control over the stablecoin protocol.

Why USDC is Becoming Indispensable for Coinbase

According to Yi, the rationale for a Coinbase acquisition of Circle is simple yet powerful: capitalize fully on the growing significance of USDC. USDC, a popular dollar-pegged stablecoin, has seen its circulation share on Coinbase’s platform increase dramatically. By Q1 2025, Coinbase was reportedly holding around 23% of the total USDC supply. This surge in adoption on the exchange has propelled USDC to become Coinbase’s second-largest revenue driver.

The stablecoin’s utility extends across various functions within the Coinbase ecosystem, from trading pairs to facilitating transfers and potentially powering future decentralized applications on networks like Base. Its deep integration makes it a critical asset for Coinbase’s operations and growth strategy.

Understanding the Current Revenue Split Holding Coinbase Back

Despite playing a leading role in driving USDC adoption and holding a significant portion of the stablecoin supply, Coinbase doesn’t capture the full revenue potential. The current setup involves a revenue-sharing agreement with Circle. While Coinbase earns full reserve income on USDC held directly on its platform, the income generated from off-platform USDC is split 50/50 with Circle. This is notable because, as Yi points out, Coinbase holds substantially more USDC than Circle.

This 50/50 split on off-platform revenue, combined with a lack of protocol-level control, limits Coinbase’s ability to innovate and scale certain products. For instance, integrating USDC more deeply or strategically into consumer wallets, developer tools, or new blockchain initiatives (like Base) might be constrained by this shared control and revenue model. A full crypto acquisition would remove these limitations.

The Strategic Benefits of a Coinbase Acquisition of Circle

Acquiring Circle would unlock several key strategic advantages for Coinbase, according to the former exec’s analysis:

• Full Revenue Capture: Coinbase would gain complete control over all revenue streams generated by USDC, including reserve income from the entire supply, not just the portion on its platform.
• Protocol Governance: Owning Circle would give Coinbase direct governance over the USDC protocol. This means having a decisive say in its development, upgrades, and strategic direction.
• Multichain Integration Control: Coinbase could fully dictate and optimize USDC’s integration across various blockchain networks, crucial for its multichain strategy and products like Coinbase Wallet and the Base network.
• Enhanced Product Flexibility: With full control, Coinbase could more seamlessly integrate USDC into its existing and future products, potentially creating more compelling offerings for users and developers.
• Dominance in the Stablecoin Market: A Coinbase acquisition of Circle would position Coinbase as a dominant force not just in crypto trading but also in the foundational layer of the crypto economy – stablecoins.

This move would transform Coinbase from a major distributor and holder of USDC into its owner and primary steward, fundamentally altering its position in the market.

Is a Crypto Acquisition Between Coinbase and Circle ‘Inevitable’?

Ryan Y Yi believes that a Coinbase acquisition of Circle is not just strategically sound but potentially inevitable. He suggests that both companies likely understand the significant long-term value and synergies that such a merger would create, even if specific deal terms haven’t been publicly discussed or agreed upon yet.

However, it’s important to note the other side of the story. Recent rumors circulating about Circle being in acquisition talks, including with Coinbase and Ripple, were explicitly denied by Circle. Circle publicly stated that these rumors were baseless. This indicates that while the strategic logic might be compelling from an external perspective (like Yi’s), internal discussions or public stances from the companies might differ significantly at this time.

The path to any major crypto acquisition is complex, involving regulatory considerations, valuation challenges, and aligning corporate cultures and visions. While the strategic case for Coinbase acquiring Circle to solidify its position with the USDC stablecoin is strong, the timeline and likelihood remain subjects of speculation, despite the former executive’s conviction.

Conclusion: A Strategic Vision for Stablecoin Dominance

The proposition that Coinbase should acquire Circle highlights a fascinating potential future for the crypto giants and the USDC stablecoin. As USDC continues its trajectory as a vital asset within the crypto ecosystem, gaining full control over its revenue, governance, and strategic integration presents a compelling opportunity for Coinbase. While the companies themselves deny current acquisition talks, the strategic logic articulated by a former insider underscores the potential long-term benefits. Whether this vision becomes reality remains to be seen, but it certainly sparks important conversations about the future consolidation and control within the rapidly evolving crypto market.

To learn more about the latest crypto market trends, explore our article on key developments shaping stablecoin adoption and institutional adoption.

This post Bold Move: Former Exec Argues Coinbase Must Acquire Circle for USDC Control first appeared on BitcoinWorld and is written by Editorial Team