Circle reports $658m revenue from stablecoin reserves in Q2

Circle, the US-based issuer of the USDC stablecoin, reported US$658 million in returns from its stablecoin reserves in its first quarter as a public company.

After distribution costs—mainly payments to Coinbase for USDC held on its platform—Circle retained US$251 million, reflecting a 38% margin.

Circle also earned US$23.8 million in other revenue and posted a net loss of US$482 million, mostly due to costs from its initial public offering.

The company averaged US$61 billion in USDC in circulation during the quarter, which was a 90% rise from last year’s second quarter, and revenue rose 53% year-on-year.

Circle’s market cap is US$39 billion, about 63% of the market cap of USDC.

The company completed its IPO in June, earning net proceeds of US$583 million by selling 19.9 million shares at US$31 each.

🔗 Source: Axios

🧠 Food for thought

1️⃣ Platform partnerships create margin pressure despite strong growth

Circle’s 38% margin after distribution costs reveals how strategic partnerships can limit profitability even during rapid expansion.

The company’s largest expense is revenue sharing with Coinbase, where Circle splits earnings on USDC held on the exchange1. This arrangement means Circle’s profits decrease as more of its $61 billion in circulating USDC gets stored on Coinbase rather than other platforms.

This dynamic illustrates a common challenge for fintech companies: dependence on key distribution partners can create structural margin constraints that persist even as the business scales successfully.

Circle’s 90% year-over-year growth in USDC circulation demonstrates strong market demand, yet the revenue-sharing agreements prevent the company from capturing the full economic value of that growth.

2️⃣ Stablecoin issuers are quietly becoming major holders of US debt

The stablecoin industry’s growth is creating an unexpected new category of major US Treasury holders, with implications beyond crypto markets.

Tether alone holds over $100 billion in Treasury bills, positioning it among the largest holders of US government debt globally2. Circle, while smaller, similarly backs its USDC with short-term Treasuries and cash through BlackRock’s Circle Reserve Fund3.