On October 16, 2026, Circle, the issuer of the USDC stablecoin, disclosed details of its revenue structure for the first half of 2026, revealing that it retained only about 7 cents in net profit for eOn October 16, 2026, Circle, the issuer of the USDC stablecoin, disclosed details of its revenue structure for the first half of 2026, revealing that it retained only about 7 cents in net profit for e

Circle Retains Just 7% of USDC Revenue: How Is the Stablecoin Business Model Changing?

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作者：Nguyen Rin Hoang

2026/10/19 17:44

On October 16, 2026, Circle, the issuer of the USDC stablecoin, disclosed details of its revenue structure for the first half of 2026, revealing that it retained only about 7 cents in net profit for every dollar of revenue. Most of its revenue was allocated to distribution partners and the financial infrastructure required to support USDC operations.

According to Circle, the company generated approximately $1.4 billion in revenue and reserve income during the first six months of the year. Of that amount, approximately $819 million was allocated to distribution partners and transaction-related expenses, while $473 million was used for operations, regulatory compliance, payment infrastructure, and product development.

The figures were published by Circle's Chief Business Officer, Kash Razzaghi, in an article titled The Economics of USDC and Why Our Partners Win. The disclosure was intended to counter arguments from emerging stablecoin competitors claiming that existing issuers retain too much economic value and charge excessive conversion fees.

Notably, Circle also reported that USDC accounted for approximately 77% of global stablecoin transaction volume in June 2026, up from 60% a year earlier. These figures suggest that Circle's growth strategy focuses not only on expanding USDC supply but also on distribution networks, liquidity, and payment accessibility across multiple platforms.

Key Takeaways

October 16, 2026: Circle disclosed its USDC revenue structure for the first half of the year to explain how the company shares economic value with its partners.

Revenue and reserve income reached approximately $1.4 billion, with income from reserve assets accounting for the majority, according to financial statements filed with the SEC.

Approximately $819 million, equivalent to 59% of revenue, was allocated to USDC distribution partners and transaction-related expenses.

Approximately $473 million, or 34% of revenue, was described by Circle as spending on operations, licensing, banking relationships, liquidity, compliance, and product development.

Circle retained approximately 7% of revenue as net profit. Its financial statements reported approximately $103.5 million in net income from continuing operations during the first half of 2026.

More than 150 partners have economic interests tied to USDC's growth, with Coinbase being one of the most important distribution partners.

USDC processed more than $36 trillion in on-chain transaction volume during the first half of 2026, according to Circle. This figure includes various blockchain activities and does not mean that all transactions represented commercial payments.

USDC accounted for approximately 77% of global stablecoin transaction volume in June 2026, according to Circle's measurement methodology, up from 60% a year earlier.

What Happened? Circle Discloses USDC Revenue Structure

How Did Circle Allocate Its $1.4 Billion in Revenue?

According to its October 16, 2026 publication, Circle generated approximately $1.4 billion in total revenue during the first six months of 2026.

Most of this revenue was allocated to two main areas: expanding the USDC distribution network and maintaining the infrastructure required for stablecoin issuance, custody, redemption, and payments.

Circle presented the following breakdown:

Category	Amount	Share
USDC distribution and transaction-related expenses	$819 million	Approximately 59%
Operations, infrastructure, compliance, and development	$473 million	Approximately 34%
Net income	Approximately $103.5 million, according to financial statements	Approximately 7%
Total revenue and reserve income	$1.395 billion	100%

The percentages are rounded according to Circle's presentation. The $473 million represents the company's description of operating and development-related expenses, rather than an entirely separate new investment outside its income statement.

According to the Form 10-Q filed with the U.S. Securities and Exchange Commission (SEC), Circle generated $1.395 billion in revenue and reserve income during the six months ended June 30, 2026.

During the same period, the company recorded approximately $819.3 million in distribution, transaction, and related expenses, alongside $103.5 million in net income from continuing operations.

These figures support Circle's statement that it retains approximately 7 cents in profit for every dollar of revenue.

Most Revenue Is Shared with Distribution Partners

Circle stated that approximately 59% of its revenue was used to compensate distribution partners and support transaction-related activities involving USDC.

These partners include cryptocurrency exchanges, wallet applications, banks, fintech companies, payment platforms, and businesses integrating USDC into their products.

A portion of the economic benefits is distributed based on the USDC balances that partners attract and maintain on their platforms.

For example, when a partner increases the amount of USDC held within its ecosystem, it may receive a share of the corresponding reserve income under its commercial agreement.

Coinbase is one of Circle's most prominent partners.

According to Circle, the average USDC balance held across Coinbase products reached $20 billion in the second quarter of 2026, representing a 44% increase year over year.

Beyond Coinbase, Circle reported that more than 150 additional partners participate in USDC's distribution ecosystem and economic value-sharing arrangements.

In September 2026, Binance also signed a five-year commercial agreement with Circle and invested $100 million in the company.

These partnerships help USDC reach more users through established financial platforms with existing customer bases.

Circle Responds to Criticism from Emerging Stablecoin Competitors

Circle disclosed its revenue structure amid criticism from several new stablecoin issuers arguing that existing business models do not share enough economic value with distribution partners.

According to Circle, these arguments generally focus on two issues: issuers retaining too much revenue from reserve assets and users facing high costs when converting stablecoins into fiat currencies.

Circle responded by demonstrating that most USDC revenue is already shared with partners or used to maintain operational infrastructure.

The company also stated that direct customers can redeem USDC for USD without fees through standard banking channels, with settlement typically completed within two business days.

Additionally, eligible customers using Circle Payments Network or Circle Platform may access near-real-time conversions without fees.

However, Circle's fee-free redemption policy for direct customers does not mean that every cryptocurrency exchange, digital wallet, or intermediary platform offers free USDC conversions.

Background / Context: What Drives USDC's Business Model?

How Does Circle Generate Revenue from USDC?

USDC is a stablecoin designed to maintain a redemption value of 1 USDC for 1 USD.

To support this mechanism, Circle maintains reserve assets corresponding to the USDC tokens in circulation.

A significant portion of these reserves consists of cash and highly liquid short-term financial instruments, including short-term U.S. Treasury securities held through appropriate reserve structures.

Interest-bearing assets generate reserve income for Circle.

During the first half of 2026, the company's financial statements reported:

Reserve income: Approximately $1.320 billion.

Other revenue: Approximately $75.2 million.

Total revenue and reserve income: Approximately $1.395 billion.

Reserve income therefore represented approximately 94.6% of Circle's total revenue and income during this period.

This demonstrates that Circle's business model remains heavily dependent on the amount of USDC in circulation and the yields generated by its reserve assets.

When USDC supply increases, reserve assets may expand accordingly. However, actual revenue also depends on interest rate conditions and how Circle allocates its reserves.

Conversely, if reserve asset yields decline, income from these assets could come under pressure even if USDC supply remains relatively stable.

USDC Expands Through a Partner Distribution Model

USDC was introduced by Circle and Coinbase in 2018 through their original partnership under the Centre Consortium.

In 2023, Circle assumed full governance and issuance responsibilities for USDC while continuing to expand its distribution network through financial institutions and technology companies.

Rather than focusing on building a dedicated application for every end user, Circle chose to integrate USDC into products that already have transaction activity and established customer bases.

This strategy has helped USDC become available across numerous cryptocurrency exchanges, wallets, blockchain networks, and payment platforms.

In return, Circle shares part of its economic benefits with partners that contribute to distributing USDC and maintaining stablecoin balances.

The reported 59% expense ratio highlights the importance of distribution activities within Circle's current business model.

USDC Transaction Volume Surged in 2026

According to Circle, USDC recorded more than $36 trillion in on-chain transaction volume during the first half of 2026.

During the same period, the total value of USDC issued and redeemed exceeded $315 billion, equivalent to an average of approximately $1.7 billion per day.

In June 2026, Circle reported that USDC accounted for approximately 77% of global stablecoin transaction volume, up from 60% a year earlier.

However, it is important to distinguish stablecoin transaction volume from actual payment activity.

On-chain transactions may include transfers between wallets, liquidity movements, exchange-related activity, smart contract interactions, and operational transactions.

Therefore, high transaction volume does not necessarily mean that the entire value represents payments for goods or money transfers between consumers.

The 77% figure also reflects Circle's own measurement methodology rather than USDC's share of total stablecoin supply.

Why It Matters: Why Is Circle Disclosing Its 7% Profit Margin?

One of Circle's most important messages is that issuing a stablecoin is not simply a matter of creating tokens and distributing profits generated by reserve assets.

For a stablecoin to achieve widespread adoption, its issuer must maintain multiple infrastructure components, including redemption liquidity, banking relationships, licenses, compliance systems, and blockchain connectivity.

These requirements create ongoing operating costs.

According to Circle, if an issuer distributes most of its economic benefits to partners without maintaining sufficient resources for infrastructure, its ability to scale and ensure stablecoin liquidity could be affected.

This represents Circle's business argument rather than proof that every stablecoin model offering higher revenue-sharing ratios is unsustainable.

The efficiency of each model still depends on its cost structure, issuance scale, operating markets, and risk management capabilities.

Distribution Networks Are Becoming a Competitive Advantage

As stablecoins become increasingly integrated into payments and financial transactions, reaching users through existing platforms is becoming more important.

Circle currently maintains a partner network that includes cryptocurrency exchanges, financial institutions, fintech companies, and payment service providers.

Each partner can introduce USDC to new customer groups or use cases.

As more platforms support USDC, users gain additional options for storing, transferring, and using the stablecoin.

However, a large distribution network also requires Circle to share more revenue, creating a trade-off between growth and profitability.

The first-half 2026 figures indicate that Circle is willing to incur substantial distribution expenses to maintain USDC's market presence.

Redemption Capabilities May Matter More Than Issuance Fees

Maintaining a stablecoin's value depends not only on reserve backing but also on reliable redemption mechanisms.

For financial institutions, the ability to convert stablecoins into fiat currency at predictable costs and within predictable timeframes is particularly important.

Circle stated that it maintains liquidity across its partner banking network to support redemption needs, including outside regular banking hours, depending on service conditions.

Maintaining readily available liquidity creates opportunity costs because highly liquid cash generally produces lower yields than certain other reserve assets.

This is one of the reasons Circle uses to explain why redemption and payment infrastructure requires continuous investment.

From a market perspective, fast, reliable, and transparent redemption capabilities can influence institutional confidence in stablecoins.

Impact: Implications for Circle, USDC, and the Stablecoin Market

Impact on Circle

For Circle, publicly disclosing its revenue structure provides greater clarity about how the company balances partner compensation, operating expenses, and profitability.

A net profit margin of approximately 7.4% during the first half of 2026 indicates that most revenue and reserve income was used to cover business-related expenses.

However, the current profit margin does not necessarily reflect profitability in future reporting periods.

Circle's financial performance may change depending on interest rates, USDC circulation, distribution agreements, and the growth rate of non-reserve revenue.

Notably, Circle is developing products such as Circle Payments Network, Circle Platform, and the Arc blockchain to expand its business into payment infrastructure and digital asset services.

If these products attract meaningful adoption, Circle could establish additional revenue sources beyond reserve income.

However, there is currently insufficient data to conclude that these new products will improve future profit margins.

Impact on USDC

For USDC, the revenue-sharing model encourages partners to integrate the stablecoin into their products and maintain balances on their platforms.

When an exchange, digital wallet, or financial company has an economic interest tied to USDC, it gains an additional commercial incentive to develop related services.

This could support USDC's accessibility, liquidity, and adoption across multiple platforms.

However, USDC's growth does not depend solely on distribution agreements.

Other important factors include confidence in reserve assets, redemption capabilities, usage costs, and competition from other stablecoins.

Impact on Coinbase and Distribution Partners

Coinbase is one of the partners benefiting from USDC's revenue-sharing model.

According to information cited by Circle, average USDC balances across Coinbase products reached approximately $20 billion in the second quarter of 2026.

This model allows partners that distribute USDC to participate in a portion of the income generated by reserve assets.

For platforms with large user bases, maintaining USDC balances can create additional revenue streams beyond traditional trading operations.

However, the amount received by each partner depends on individual commercial agreements and the scale of its operations.

The $819 million figure should not be interpreted as the entire amount paid exclusively to Coinbase, as it includes multiple partners and transaction-related expenses.

Impact on Stablecoin Competition

Circle's announcement comes as more companies seek to develop stablecoins using different revenue-sharing and distribution models.

Some emerging issuers may compete by offering higher economic benefit-sharing ratios, lower costs, or services targeting specialized customer segments.

Meanwhile, Circle emphasizes its existing advantages in licensing, banking relationships, liquidity scale, and distribution partnerships.

This suggests that stablecoin competition may increasingly focus on the ability to provide comprehensive financial services rather than simply comparing the percentage of profits retained by issuers.

However, there is insufficient evidence to determine which model will dominate over the long term.

The outcome will depend on how effectively each business meets user needs, manages capital efficiency, and adapts to regulations across different markets.

What Happens Next? Key Developments to Watch

Circle is expected to release its third-quarter 2026 financial results on November 4, 2026. The report will provide additional data to assess whether the company's revenue and profit structure remains consistent with the first half of the year.

Important indicators to monitor include:

USDC circulating supply: Changes in stablecoin supply may directly affect reserve assets and related income.

Reserve income: The impact of interest rates and reserve asset allocation on revenue.

Distribution expenses: The ratio of distribution and transaction-related costs to total revenue will indicate competitive pressures and the cost of maintaining the partner network.

Net profit margin: Comparing future reporting periods will help determine whether Circle can maintain profitability as USDC supply changes.

Issuance and redemption volume: These metrics reflect liquidity demand and the utilization of Circle's infrastructure.

Non-reserve revenue: Contributions from Circle Payments Network, Circle Platform, Arc, and related services.

Real-world stablecoin activity: Distinguishing total on-chain token transfer volume from payment transactions representing actual economic activity.

In the long term, the key question for Circle is whether it can continue expanding USDC while keeping distribution and operating expenses at levels consistent with sustainable profitability.

FAQ

1. How Does Circle Make Money from USDC?

Circle primarily generates revenue from the income earned on reserve assets backing USDC, including cash and eligible short-term financial instruments.

During the first half of 2026, reserve income reached approximately $1.32 billion, accounting for the majority of total revenue.

The company is also developing additional financial infrastructure and payment services to diversify its revenue sources.

2. Does Circle Really Retain Only 7% of Its Revenue?

According to its October 16, 2026 disclosure, Circle retains approximately 7 cents in net profit for every dollar of revenue.

Financial statements filed with the SEC show approximately $103.5 million in net income from continuing operations on $1.395 billion in revenue and reserve income, equivalent to a profit margin of approximately 7.4%.

3. Why Does Circle Pay $819 Million to Partners?

The $819 million includes USDC distribution expenses, transaction costs, and related expenses.

Circle shares economic benefits with partners that help bring USDC to users and maintain stablecoin balances on their platforms.

This is part of the company's strategy to expand its distribution network.

4. Is Converting USDC to USD Free?

Circle states that direct customers can redeem USDC for USD without fees through standard banking channels, with settlement typically completed within two business days.

Eligible customers using certain Circle products may also access near-real-time conversions without fees.

However, intermediary platforms may still impose their own charges.

5. Does USDC Really Account for 77% of the Stablecoin Market?

According to Circle, USDC accounted for approximately 77% of global stablecoin transaction volume in June 2026, up from 60% during the same period a year earlier.

This figure represents transaction volume measured using Circle's methodology, not USDC's share of total stablecoin supply.

Other data providers may report different percentages depending on how transactions are filtered and classified.

6. Does Circle's Revenue Structure Affect the Price of USDC?

USDC is designed to maintain a 1:1 redemption value against the U.S. dollar, meaning its purpose is not to appreciate like conventional investment tokens.

Circle's revenue structure may influence its ability to invest in, distribute, and maintain USDC infrastructure, but it does not directly create a mechanism for increasing USDC's price.

More important factors for USDC's stability include reserve quality, redemption capabilities, and effective risk management.

Disclaimer: The information provided here is for informational purposes only and should not be considered financial, investment, legal, or professional advice. Always conduct your own research, consider your financial situation, and, if necessary, consult with a licensed professional before making any decisions.

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