Circle, the developer behind the USDC stablecoin, revealed in its IPO filing that it earns significantly less from the digital asset than its distributor, Coinbase.
Circle's USDC Distribution Expenses
Circle paid Coinbase $908 million in 2023 for USDC distribution, marking it as the company's largest single expense. Despite launching USDC together in 2018, Coinbase's distribution role yields higher returns.
USDC Market Cap Growth and Market Impact
In 2024, USDC's market capitalization surged by 78%, currently standing at $60 billion, maintaining its position as the second-largest stablecoin after USDT. USDC recorded over $25 trillion in on-chain transactions, operating on 19 different blockchains.
Interest Rates Impact on Circle's Profit
A 200 basis point reduction in U.S. interest rates could cut Circle's annual profits by approximately $414 million due to its reliance on interest income from reserves backing USDC. This highlights the company's exposure to Federal Reserve policy changes.
Circle's IPO enters the market amid intensified stablecoin competition, where traditional financial institutions and crypto companies like PayPal and Ripple present additional challenges with their regulated market solutions.
