[Weekend Money] USDC Circulation Up 20%... The Company Cementing Its Position as the Leading Stablecoin Player

Rising Circulation Offset Declining Reserve Yields
Growth Momentum Expands with Payments and Tokenization Businesses

Stablecoin issuer Circle Internet Group (CRCL) has continued to post stable results, benefiting from an increase in the circulation of its US dollar-pegged stablecoin USDC and improved cost efficiency, despite declining interest rates. Despite concerns in some parts of the market about intensified competition following the launch of "Open USD," some analysts expect the company to remain the biggest beneficiary of stablecoin market expansion in the regulated sector for the foreseeable future.

Jinhyun Hong, an analyst at Samsung Securities, said, “A significant increase in the average circulation of USDC in the second quarter of this year largely offset the impact of declining yields from reserve management. The expansion of its own platforms and greater distribution cost efficiency also drove improved profitability.”

In the second quarter, Circle recorded revenue of 700 million dollars, a 7% year-on-year increase. Adjusted EBITDA stood at 140 million dollars, up 8% from the same period last year.

Most of its revenue came from reserve management yields, which accounted for 670 million dollars, or 95% of total revenue. Other revenue reached 34 million dollars, up 41% year-on-year. Net profit turned positive at 48 million dollars. However, this was largely due to a base effect stemming from the disappearance of substantial stock-based compensation expenses incurred during last year’s IPO process, and thus it is difficult to conclude that the underlying business profitability has markedly improved.

Hong explained, “The shift to positive net profit is largely due to accounting base effects. When evaluating the company’s true business competitiveness, the focus should be on reserve management yield and cost efficiency improvements.”

The increase in USDC circulation was a key factor in the solid performance. The average circulation of USDC in the second quarter reached 73.3 billion dollars, a 20% increase from the same period last year. By contrast, the reserve management yield dropped by 0.66 percentage points to 3.48%, but the larger circulation offset this decline.

The cost structure also improved. Real revenue excluding distribution costs (RLDC) stood at 289 million dollars, up 15% year-on-year. The RLDC margin rose to 41.2%, up 3 percentage points from the same period last year.

“As the USDC ecosystem expanded and distribution became more cost-efficient, profitability improved,” Hong observed, adding, “This indicates not only simple circulation growth, but also that the business structure itself is improving, which is significant.”

Circle has also laid out a strategy to expand beyond USDC into payment and tokenized financial infrastructure. The company is nurturing USDC, CPN (Circle Payments Network), and Arc as its three core business pillars.

Use cases for USDC continue to grow across derivatives, real-world asset tokenization (RWA), prediction markets, inter-institutional settlements, and collateral trades. CPN functions as a network connecting financial institutions, supporting cross-border remittances and B2B payments, and is seen as a key business for increasing non-interest revenue outside of reserve management yields. Arc is a blockchain platform for institutions that supports integrated issuance, payments, collateral, and settlement of tokenized assets, positioning Circle as a financial market infrastructure provider beyond merely a stablecoin issuer.

Some point out that the recently unveiled Open USD project in July has become a new variable. If the revenue structure of splitting reserve management yield with distributors becomes reality, it could impact Circle’s profit model.

However, Hong noted that there are significant challenges before such a structure can be commercialized. The key elements—including issuer structure, licensing acquisition method, and reserve asset management and custody institutions—have yet to be disclosed, and some companies have denied participating in the open standard, adding to the uncertainty. There is also a possibility that regulators could interpret the structure of distributing reserve revenue to distributors as an indirect interest payment.

“While there is both anticipation and concern around Open USD, significant institutional and regulatory uncertainties remain,” Hong concluded. “In the short term, the direct benefits from US stablecoin regulation and market expansion are still likely to be concentrated on Circle.”

This content was produced with the assistance of AI translation services.