Circle

At a glance

What it does

Circle mints a USDC for every dollar a verified client sends through Circle Mint, and burns it on redemption. Most people never touch Circle directly; they hold USDC bought on an exchange or received in an app.

The reserve sits in two places. About 88% was held at the end of 2025 in the Circle Reserve Fund, a government money-market fund managed by BlackRock, with BNY as custodian. The rest is cash at banks, kept for redemptions. Circle publishes monthly reserve reports attested by Deloitte.

USDC was created in 2018 through Centre, a consortium Circle ran with Coinbase. In August 2023 the two dissolved Centre, Circle became the sole issuer, and a new collaboration agreement set how reserve income is shared.

The business model

Reserve income is the interest earned on the reserve, and it is almost all of Circle's revenue: 95.2% in Q2 2026, according to Circle's results. Holders receive none of it from Circle; the GENIUS Act bars issuers of US payment stablecoins from paying interest.

The large cost is distribution. Under the Coinbase agreement, Coinbase takes 100% of the reserve income on USDC held on its platform and 50% of the residual on USDC held elsewhere. The deal was renewed on 18 August 2026 through 2029. Distribution and transaction costs took between 58.6% and 61.8% of Circle's revenue in every published quarter from Q1 2025 to Q2 2026. Circle keeps roughly 40 cents of each dollar before paying its own staff and running costs.

That structure makes Circle sensitive to interest rates. A cut in the Fed rate lowers revenue directly, while the Coinbase share scales with it, so Circle's own margin shrinks from the top.

How it is different

Circle chose the licensed route everywhere. It holds a New York BitLicense from 2015, a French e-money licence that lets it issue USDC and EURC under MiCA, and on 10 July 2026 received final OCC approval for a national trust bank, First National Digital Currency Bank. It listed on the NYSE as CRCL on 5 June 2025.

Compared with Tether, Circle has a cleaner reserve and more disclosure, and it accepted a thinner margin to buy distribution. Compared with Paxos, it keeps its own brand rather than renting issuance to others. Its newer products, Arc (its own blockchain) and the Circle Payments Network, try to capture fees beyond reserve interest.

Where it fits

What one USDC actually is walks through the claim a USDC holder owns. Under the hood covers minting, redemption and freezes. How stablecoin issuers make money breaks down Circle's filings. The rules explains the GENIUS Act and MiCA, where Circle benefits most. A short history of stablecoins covers the SVB weekend. Related profiles: Tether, BlackRock.

Risks and open questions

Bank risk is real even for cash reserves. In March 2023, 3.3 bn USD of USDC reserves sat in Silicon Valley Bank when it failed, and USDC traded near 0.87 USD for a weekend until the deposits were guaranteed. Moving most of the reserve into a Treasury fund reduced that exposure.

Rates and distribution squeeze from two sides. Lower rates cut revenue, and growth concentrated on Coinbase earns Circle less per dollar than growth elsewhere.

Circle can freeze USDC at any address and does so on lawful orders. That makes USDC easier for regulated firms to accept and less neutral for users who worry about censorship.

What to watch next

• The Fed path: each 25 bps cut removes a measurable slice of Circle's revenue.
• Arc and the Circle Payments Network, and whether fee income becomes visible in quarterly results.
• USDC growth outside Coinbase, which carries a better margin for Circle.
• How the national trust bank is used, starting with custody and, later, reserve management.
• Final GENIUS Act rules, due to take effect by 18 January 2027 at the latest.