USDC’s 72% surge exposed the expensive truth behind Circle’s stablecoin dominance
Circle’s 2025 filing shows rising economics pressure around USDC distribution. Distribution costs tied to Coinbase rose to $1.4 billion from $924.5 million, equal to about 51% of total revenue and reserve income. USDC circulation grew 72% year over year to $75.3 billion in Q4, while full-year revenue and reserve income rose 64% to $2.7 billion. Circle still kept a 39% margin after distribution and transaction costs, unchanged from 2024, but those costs took about 63% of Q4 reserve income. The Coinbase deal runs through August 2026 and can renew if no changes are agreed. Meanwhile, competing models like Open USD and Hyperliquid show that platforms can demand a larger share of reserve yield without losing USDC liquidity. JPMorgan sees this as a near-term earnings headwind and a longer-term threat to USDC economics. Circle’s new national trust bank charter may help, but broader adoption of rival revenue-sharing terms could reduce Circle’s retained share further.
