- Circle paid Coinbase $908 million for USDC distribution, its highest annual expense in 2023.
- Circle’s profit would drop by $414 million if interest rates fell by 200 basis points.
- USDC’s circulating supply rose by 78% in 2024, with a market cap now at $60 billion.
Circle, the company behind the USDC stablecoin, has revealed in its IPO filing that it earns significantly less from the digital asset than its distribution partner, Coinbase. The document shows that Circle paid Coinbase $908 million in 2023 for distributing USDC, making it the company’s largest single expense.
Despite launching USDC together in 2018, Coinbase’s role in USDC distribution appears to yield higher returns.The transaction fee segment drove most of Coinbase’s reported $2.3 billion Q4 revenue total. The 2024 revenue at Circle reached $1.7 billion while in 2022 it was valued at $772 million. The net income reported by Circle in 2024 reached $221.6 million while the company experienced a $758 million loss in 2022.
USDC records $25 trillion in on-chain transactions
USDC has recorded over $25 trillion in lifetime on-chain transaction volume. Since inception, more than $1 trillion worth of USDC has been minted and redeemed. The stablecoin now operates on 19 different blockchains. Its market capitalization surged by 78% in 2024 and currently stands at $60 billion, maintaining its position as the second-largest stablecoin after Tether’s USDT.
Circle has disclosed that a 200 basis point reduction in U.S. interest rates would reduce its annual profits by approximately $414 million. This is due to Circle’s heavy reliance on interest income from the reserves backing USDC. The current revenue model is directly influenced by Federal Reserve policies, placing the company’s future earnings at risk in a falling rate environment.
The IPO launches during an intensified competition between stablecoins in the market. Traditional financial institutions as well as crypto-oriented companies PayPal and Ripple operate separate regulated stablecoin solutions which create heightened market competition. Ripple gained substantial market interest by releasing its RLUSD product.
