Cryptocurrency exchange Coinbase is acquiring a stake in Circle, the issuer of the stable cryptocurrency USDC, signaling a closer relationship between these two key players in the cryptocurrency realm.

Both companies also announced the closure of the Centre Consortium, a private governance organization for USDC, citing newfound “regulatory clarity” concerning stable cryptocurrencies.

“Reflecting Coinbase’s belief in the fundamental importance of stablecoins to the broader crypto economy, Coinbase is acquiring a stake in Circle,” Coinbase stated in a blog post.

“This means that Coinbase and Circle will now have even greater strategic and economic alignment on the future of the financial system. Coinbase is committed to the long-term success of the stablecoin ecosystem, specifically USDC.”

In March, USDC experienced a significant drop below its pegged value after the collapse of Silicon Valley Bank, a major lender to the tech industry.

Circle had been a customer of SVB and had $3.3 billion of its cash reserves stored in the bank.

Subsequently, the coin returned to its pegged value of $1 after U.S. regulators shuttered SVB, took control of its deposits, and worked to restore customers’ access to their funds.

Circle launched its own version of a U.S. dollar-pegged “stablecoin” in 2018. The fintech firm, which put off plans to go public through a merger with a special purpose acquisition company in December, is a significant player in the $124.1 billion “stablecoin” market.

Source: CNBC.com