[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

Circle Internet Group (CRCL), the issuer of stablecoins, continued to post stable results despite falling interest rates, supported by the increasing circulation of USDC—a dollar-pegged stablecoin—and ongoing cost optimization efforts. Despite concerns in some corners of the market about intensified competition following the launch of 'Open USD,' analysts believe Circle is poised to be the biggest beneficiary of the institutional stablecoin market expansion, at least in the short term.

Jinhyun Hong, a researcher at Samsung Securities, said, "The average circulation of USDC in the second quarter this year rose significantly, which offset much of the impact from declining reserve investment yields." He added, "Profitability also improved, thanks to platform expansion and more efficient distribution costs."

In the second quarter of this year, Circle reported revenues of $700 million, marking a 7% increase from the same period last year. Adjusted EBITDA reached $140 million, up 8% year-on-year.

The majority of revenue came from reserve investment income. Reserve investment income amounted to $670 million, accounting for 95% of total revenue. Other revenues reached $34 million, up 41% from the same period last year. Net profit stood at $48 million, marking a return to profitability. However, this turnaround is largely due to a base effect stemming from the absence of substantial stock-based compensation costs triggered during last year’s initial public offering (IPO) process, meaning it would be inaccurate to interpret this as a sharp improvement in the company’s core business profitability.

Researcher Hong commented, "The return to a net profit is mainly an accounting base effect," adding, "It is more appropriate to evaluate the company’s true business competitiveness by focusing on reserve investment income and improvements in cost efficiency."

The principal driver of performance was the increase in USDC circulation. In the second quarter, the average USDC circulation reached $73.3 billion, representing a 20% increase over the previous year. Meanwhile, the reserve investment yield dropped to 3.48%, down 0.66 percentage points from the previous year, but the expanded circulation was enough to offset the yield decline.

The cost structure also improved. Net sales excluding distribution costs (RLDC) totaled $289 million, a 15% increase compared to the same period last year. The RLDC margin also rose to 41.2%, up 3 percentage points year-on-year.

Hong noted, "The simultaneous expansion of the USDC ecosystem and increased efficiency in distribution costs have strengthened profitability," and emphasized, "This reflects not just increased circulation, but also a structural improvement in the business itself."

Looking ahead, Circle is pursuing a strategy to expand its business beyond USDC into payments and tokenized financial infrastructure. The company is developing USDC, CPN (Circle Payments Network), and Arc as its three central business pillars.

USDC's utility is broadening across derivatives, real-world asset tokenization (RWA), prediction markets, inter-institutional settlements, and collateralized transactions. CPN is a network that connects financial institutions to support cross-border remittances and business-to-business payments, viewed as a vital business segment for growing non-interest revenues beyond reserve investment income. Arc is an institutional blockchain platform providing integrated support for tokenized asset issuance, payment, collateralization, and settlement, positioning Circle as a financial market infrastructure company, rather than merely a stablecoin issuer.

Meanwhile, some note that the Open USD project, announced last month, has emerged as a new variable. If the reserve investment income sharing model with distributors is actually implemented, it could impact Circle’s revenue structure.

However, Researcher Hong assessed that several hurdles must be overcome for such a model to actually be commercialized. Key aspects such as the issuer, licensing process, reserve asset management, and custody institutions have not yet been disclosed, and some companies have denied participation in the open standard initiative, further heightening uncertainty. Additionally, there is a risk that allocating reserve income to distributors could be interpreted by regulators as an indirect interest payment.

Hong concluded, "While both anticipation and concern surround Open USD, significant institutional and regulatory uncertainties remain," and added, "In the near term, the direct benefits from the regulatory formalization and market expansion of stablecoins in the U.S. are still highly likely to be concentrated on Circle."

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