Key Takeaways:

1. Circle achieved a revenue of $1.7 billion in 2024, with 99% derived from the interest income of USDC reserves. The distribution costs with partners such as Coinbase and Binance (BN) totaled $1.01 billion, highlighting the crucial role of trading platforms in expanding USDC's reach.

2. The total supply of USDC has rebounded to $60 billion, with a 30-day average transfer volume of $40 billion, indicating a recovery of market confidence and cross-chain adoption. However, USDC remains sensitive to interest rate changes, competitive pressures, and regulatory developments.

3. USDC's usage on major trading platforms continues to grow, currently accounting for 29% of Binance's spot trading volume, thanks to Circle's strategic partnerships.

4. Looking ahead, Circle's next phase may rely on diversifying from passive interest income to active revenue sources, including tokenized assets, payment infrastructure, and capital market integration.

Introduction

Circle, the largest US-based stablecoin issuer and the company behind the $60 billion market cap USDC, recently filed for an IPO, offering insights into the financial health and strategic outlook of this cryptocurrency cornerstone. As the only direct investment opportunity in the fastest-growing area of cryptocurrency in the public market, Circle's IPO comes at a critical time when stablecoin legislation is gradually taking shape and competition is intensifying. Although market conditions may delay the IPO, by combining on-chain data of USDC with information from Circle's IPO filings, we will analyze its revenue sources, the impact of interest rates on its business, the role of platforms like Coinbase and Binance in shaping USDC distribution, and evaluate Circle's positioning in the increasingly competitive market.

Circle Financial Overview

From its origins as a Bitcoin payment application to becoming a leading stablecoin issuer and crypto infrastructure provider, Circle has navigated numerous challenges over its 12-year journey. After explosive revenue growth in 2021 (450%) and 2022 (808%), growth slowed in 2023 with an 88% increase in revenue, when USDC was affected by the collapse of Silicon Valley Bank. By the end of 2024, Circle reported a revenue of $1.7 billion, up 15% year-on-year, showing a more stable expansion trend.

Behind the 60 Billion USDC: Unveiling the Rise of Circle Empire

Source: Circle S-1 Filings

However, profitability was compressed, with net profit and adjusted EBITDA falling by 42% and 28% respectively, to $157 million and $285 million. Notably, Circle's financial data shows that revenue is highly concentrated in reserve interest income, with distribution costs to partners such as Coinbase and Binance reaching approximately $1.01 billion. Yet, these factors have driven the recovery of USDC supply, which grew by 80% throughout the year to $44 billion.

USDC On-Chain Growth

USDC, launched in collaboration with Coinbase in 2018, is at the core of Circle's business. As the tokenized form of the US dollar, USDC allows users to store value digitally and transact on blockchain networks, enabling nearly instantaneous and low-cost settlements. USDC operates on a full-reserve model, backed 1:1 by highly liquid assets including short-term US Treasury bills, overnight repurchase agreements, and cash held in regulated financial institutions.

Behind the 60 Billion USDC: Unveiling the Rise of Circle Empire

Source: Coin Metrics Network Data Pro & Coin Metrics Labs

The total supply of USDC has grown to approximately $60 billion, firmly establishing it as the second-largest stablecoin after Tether's USDT. Despite a dip in market share in 2023, it has rebounded to 26%, reflecting restored market confidence. Of this, about $40 billion (65%) is issued on Ethereum, $9.5 billion on Solana (15%), $3.75 billion on Base Layer-2 (6%), with the remainder distributed across chains such as Arbitrum, Optimism, Polygon, and Avalanche.

The speed and transfer volume of USDC have also seen significant growth, with a 30-day average transfer volume of around $40 billion. In 2025, USDC transfers mainly occur on Base and Ethereum, sometimes accounting for 90% of the adjusted total transfer volume.

Behind the 60 Billion USDC: Unveiling the Rise of Circle Empire

Source: Coin Metrics Network Data Pro

These metrics indicate that the usage of USDC is continuously growing as stablecoins become more attractive as a US dollar substitute and as part of payment and fintech infrastructure in emerging markets. This also reflects Circle's cross-chain strategy, with USDC widely available on major blockchains and supported by interoperability tools such as the Cross-Chain Transfer Protocol (CCTP).

Reserve Composition and Interest Rate Sensitivity

For every dollar of USDC issued, Circle invests the reserves in a portfolio of highly liquid, low-risk assets such as short-term US Treasury bills and cash deposits. This structure allows Circle to generate income from the reserves while ensuring liquidity and redemption stability for USDC holders. Circle disclosed in its filings that reserve income in 2024 was $1.6 billion, accounting for 99% of total revenue, indicating a highly interest-rate-dependent revenue structure.

USDC reserves are primarily held in the Circle Reserve Fund, an SEC-registered government money market fund managed by BlackRock. According to Circle's monthly attestations, financial statements, and the BlackRock Circle Reserve Fund, as of April 11, $53.5 billion (about 88%) of the USDC reserves consisted of US Treasury bills and overnight repurchase agreements with multiple financial institutions, all with maturities of less than two months. Additionally, 11% of the reserves were cash held in regulated banks.

Behind the 60 Billion USDC: Unveiling the Rise of Circle Empire

Source: Circle Transparency & BlackRock Circle Reserve Fund

Based on Circle's 2024 reserve income of $1.6 billion and approximately $44 billion in reserve assets, the annualized yield is estimated to be around 3.6%. If interest rates remain at current levels and the USDC supply remains stable or grows, Circle's reserve income may remain stable.

Our previous research on the decline of USDC supply during periods of rising interest rates shows that Circle's reserve income is highly correlated with current interest rates, indicating the sensitivity of its revenue model to interest rate changes. The effective federal funds rate in 2024 ranged from 4.58% to 5.33%. What would Circle's outlook be if interest rates decline? In the S-1 filing, Circle estimates that a 1% drop in interest rates could lead to a $441 million decrease in stablecoin reserve income, a key risk outlined in the document.

Since Circle retains all the earnings (unlike issuers such as Ethena and Maker, which pass interest to holders), its business model remains sensitive to future interest rate changes, competitive pressures, and regulatory evolution.

Distribute, Distribute, Distribute

The Role of Coinbase and Binance

Circle's IPO filings also reveal the importance of partners such as Coinbase and Binance in driving USDC adoption. In 2024, distribution costs totaled $1.01 billion, up 40% from 2023 and 150% from 2022.

While the relationship between Coinbase and Circle is well-known, the filings show a more financially intertwined connection. In 2024, Coinbase earned $908 million from USDC-related activities, accounting for approximately 13.8% of its total revenue. Under its revenue-sharing agreement with Circle, Coinbase receives 100% of the interest on USDC held on its platform and 50% of the interest on USDC held elsewhere. With the USDC supply on Coinbase increasing from 5% in 2022 to 20%, the majority of the economic benefits seem to accrue to Coinbase. The filings also disclose a one-time payment of $60.25 million to Binance to facilitate distribution in a similar manner.

Behind the 60 Billion USDC: Unveiling the Rise of Circle Empire

Source: Coin Metrics Market Data Feed

Examining spot trading activities on key partner trading platforms, USDC now accounts for 29% (about $6.2 billion) of Binance's spot trading volume, surpassing its share after the recent de-pegging of FDUSD and second only to USDT, which accounts for approximately 50%. On Coinbase, USDC drives about 90% of the spot trading in the combined USD and USDC markets.

Despite the high costs, Circle's distribution efforts have translated into significant adoption at the trading platform level, boosting USDC's liquidity and a credible $10 billion spot trading volume across trading platforms.

Beyond Trading Platforms: Empowering DeFi and Commerce

By differentiating the USDC supply held in smart contracts versus externally owned accounts (EOAs) on Ethereum, we can understand the distribution of USDC in user wallets and applications. Currently, about $30 billion is held by EOAs, up 66% year-on-year, while approximately $10 billion is in smart contracts, up by about 42%. The growth in EOA balances may reflect increased custody by trading platforms and personal user holdings, while the increase in smart contracts indicates the importance of USDC as collateral in DeFi lending markets and liquidity on decentralized exchanges (DEXs).

Behind the 60 Billion USDC: Unveiling the Rise of Circle Empire

Source: Coin Metrics Network Data Pro

USDC continues to play a foundational role in DeFi lending markets, with protocols such as Aave, Spark, and Morpho locking up over $5 billion (representing the portion of USDC supply not lent out). For Maker (now Sky) and other collateralized debt protocols, approximately $4 billion of USDC supports the issuance of Dai/USDS through its peg stability module.

Behind the 60 Billion USDC: Unveiling the Rise of Circle Empire

Source: Coin Metrics ATLAS & Reference Rates

Similarly, USDC is a key liquidity source for various DEX pools, facilitating stable-value trades. It is also increasingly underpinning on-chain foreign exchange markets, especially with the rise of other fiat-pegged stablecoins such as Circle's MiCA-compliant EURC.

Conclusion

The on-chain growth of USDC reflects the recovery of market confidence, but Circle's filings also highlight key challenges, particularly high distribution costs and heavy reliance on interest income. To maintain momentum in a low-interest-rate environment, Circle aims to diversify its revenue through active product lines such as Circle Mint and expand its tokenized asset infrastructure by acquiring Hashnote, the largest issuer of tokenized money market funds.

With increased regulatory clarity, especially the SEC's stance that stablecoins are not securities, Circle is well-positioned. However, it now faces increasingly fierce competition from overseas issuers such as Tether and a new wave of US competitors capitalizing on policy changes. Although Circle's valuation is yet to be determined, its IPO will mark the first opportunity for the public market to directly invest in the growth of stablecoin infrastructure.

Key Takeaways:

1. Circle achieved a revenue of $1.7 billion in 2024, with 99% derived from the interest income of USDC reserves. The distribution costs with partners such as Coinbase and Binance (BN) totaled $1.01 billion, highlighting the crucial role of trading platforms in expanding USDC's reach.

2. The total supply of USDC has rebounded to $60 billion, with a 30-day average transfer volume of $40 billion, indicating a recovery of market confidence and cross-chain adoption. However, USDC remains sensitive to interest rate changes, competitive pressures, and regulatory developments.

3. USDC's usage on major trading platforms continues to grow, currently accounting for 29% of Binance's spot trading volume, thanks to Circle's strategic partnerships.

4. Looking ahead, Circle's next phase may rely on diversifying from passive interest income to active revenue sources, including tokenized assets, payment infrastructure, and capital market integration.

Introduction

Circle, the largest US-based stablecoin issuer and the company behind the $60 billion market cap USDC, recently filed for an IPO, offering insights into the financial health and strategic outlook of this cryptocurrency cornerstone. As the only direct investment opportunity in the fastest-growing area of cryptocurrency in the public market, Circle's IPO comes at a critical time when stablecoin legislation is gradually taking shape and competition is intensifying. Although market conditions may delay the IPO, by combining on-chain data of USDC with information from Circle's IPO filings, we will analyze its revenue sources, the impact of interest rates on its business, the role of platforms like Coinbase and Binance in shaping USDC distribution, and evaluate Circle's positioning in the increasingly competitive market.

Circle Financial Overview

From its origins as a Bitcoin payment application to becoming a leading stablecoin issuer and crypto infrastructure provider, Circle has navigated numerous challenges over its 12-year journey. After explosive revenue growth in 2021 (450%) and 2022 (808%), growth slowed in 2023 with an 88% increase in revenue, when USDC was affected by the collapse of Silicon Valley Bank. By the end of 2024, Circle reported a revenue of $1.7 billion, up 15% year-on-year, showing a more stable expansion trend.

Behind the 60 Billion USDC: Unveiling the Rise of Circle Empire

Source: Circle S-1 Filings

However, profitability was compressed, with net profit and adjusted EBITDA falling by 42% and 28% respectively, to $157 million and $285 million. Notably, Circle's financial data shows that revenue is highly concentrated in reserve interest income, with distribution costs to partners such as Coinbase and Binance reaching approximately $1.01 billion. Yet, these factors have driven the recovery of USDC supply, which grew by 80% throughout the year to $44 billion.

USDC On-Chain Growth

USDC, launched in collaboration with Coinbase in 2018, is at the core of Circle's business. As the tokenized form of the US dollar, USDC allows users to store value digitally and transact on blockchain networks, enabling nearly instantaneous and low-cost settlements. USDC operates on a full-reserve model, backed 1:1 by highly liquid assets including short-term US Treasury bills, overnight repurchase agreements, and cash held in regulated financial institutions.

Behind the 60 Billion USDC: Unveiling the Rise of Circle Empire

Source: Coin Metrics Network Data Pro & Coin Metrics Labs

The total supply of USDC has grown to approximately $60 billion, firmly establishing it as the second-largest stablecoin after Tether's USDT. Despite a dip in market share in 2023, it has rebounded to 26%, reflecting restored market confidence. Of this, about $40 billion (65%) is issued on Ethereum, $9.5 billion on Solana (15%), $3.75 billion on Base Layer-2 (6%), with the remainder distributed across chains such as Arbitrum, Optimism, Polygon, and Avalanche.

The speed and transfer volume of USDC have also seen significant growth, with a 30-day average transfer volume of around $40 billion. In 2025, USDC transfers mainly occur on Base and Ethereum, sometimes accounting for 90% of the adjusted total transfer volume.

Behind the 60 Billion USDC: Unveiling the Rise of Circle Empire

Source: Coin Metrics Network Data Pro

These metrics indicate that the usage of USDC is continuously growing as stablecoins become more attractive as a US dollar substitute and as part of payment and fintech infrastructure in emerging markets. This also reflects Circle's cross-chain strategy, with USDC widely available on major blockchains and supported by interoperability tools such as the Cross-Chain Transfer Protocol (CCTP).

Reserve Composition and Interest Rate Sensitivity

For every dollar of USDC issued, Circle invests the reserves in a portfolio of highly liquid, low-risk assets such as short-term US Treasury bills and cash deposits. This structure allows Circle to generate income from the reserves while ensuring liquidity and redemption stability for USDC holders. Circle disclosed in its filings that reserve income in 2024 was $1.6 billion, accounting for 99% of total revenue, indicating a highly interest-rate-dependent revenue structure.

USDC reserves are primarily held in the Circle Reserve Fund, an SEC-registered government money market fund managed by BlackRock. According to Circle's monthly attestations, financial statements, and the BlackRock Circle Reserve Fund, as of April 11, $53.5 billion (about 88%) of the USDC reserves consisted of US Treasury bills and overnight repurchase agreements with multiple financial institutions, all with maturities of less than two months. Additionally, 11% of the reserves were cash held in regulated banks.

Behind the 60 Billion USDC: Unveiling the Rise of Circle Empire

Source: Circle Transparency & BlackRock Circle Reserve Fund

Based on Circle's 2024 reserve income of $1.6 billion and approximately $44 billion in reserve assets, the annualized yield is estimated to be around 3.6%. If interest rates remain at current levels and the USDC supply remains stable or grows, Circle's reserve income may remain stable.

Our previous research on the decline of USDC supply during periods of rising interest rates shows that Circle's reserve income is highly correlated with current interest rates, indicating the sensitivity of its revenue model to interest rate changes. The effective federal funds rate in 2024 ranged from 4.58% to 5.33%. What would Circle's outlook be if interest rates decline? In the S-1 filing, Circle estimates that a 1% drop in interest rates could lead to a $441 million decrease in stablecoin reserve income, a key risk outlined in the document.

Since Circle retains all the earnings (unlike issuers such as Ethena and Maker, which pass interest to holders), its business model remains sensitive to future interest rate changes, competitive pressures, and regulatory evolution.

Distribute, Distribute, Distribute

The Role of Coinbase and Binance

Circle's IPO filings also reveal the importance of partners such as Coinbase and Binance in driving USDC adoption. In 2024, distribution costs totaled $1.01 billion, up 40% from 2023 and 150% from 2022.

While the relationship between Coinbase and Circle is well-known, the filings show a more financially intertwined connection. In 2024, Coinbase earned $908 million from USDC-related activities, accounting for approximately 13.8% of its total revenue. Under its revenue-sharing agreement with Circle, Coinbase receives 100% of the interest on USDC held on its platform and 50% of the interest on USDC held elsewhere. With the USDC supply on Coinbase increasing from 5% in 2022 to 20%, the majority of the economic benefits seem to accrue to Coinbase. The filings also disclose a one-time payment of $60.25 million to Binance to facilitate distribution in a similar manner.

Behind the 60 Billion USDC: Unveiling the Rise of Circle Empire

Source: Coin Metrics Market Data Feed

Examining spot trading activities on key partner trading platforms, USDC now accounts for 29% (about $6.2 billion) of Binance's spot trading volume, surpassing its share after the recent de-pegging of FDUSD and second only to USDT, which accounts for approximately 50%. On Coinbase, USDC drives about 90% of the spot trading in the combined USD and USDC markets.

Despite the high costs, Circle's distribution efforts have translated into significant adoption at the trading platform level, boosting USDC's liquidity and a credible $10 billion spot trading volume across trading platforms.

Beyond Trading Platforms: Empowering DeFi and Commerce

By differentiating the USDC supply held in smart contracts versus externally owned accounts (EOAs) on Ethereum, we can understand the distribution of USDC in user wallets and applications. Currently, about $30 billion is held by EOAs, up 66% year-on-year, while approximately $10 billion is in smart contracts, up by about 42%. The growth in EOA balances may reflect increased custody by trading platforms and personal user holdings, while the increase in smart contracts indicates the importance of USDC as collateral in DeFi lending markets and liquidity on decentralized exchanges (DEXs).

Behind the 60 Billion USDC: Unveiling the Rise of Circle Empire

Source: Coin Metrics Network Data Pro

USDC continues to play a foundational role in DeFi lending markets, with protocols such as Aave, Spark, and Morpho locking up over $5 billion (representing the portion of USDC supply not lent out). For Maker (now Sky) and other collateralized debt protocols, approximately $4 billion of USDC supports the issuance of Dai/USDS through its peg stability module.

Behind the 60 Billion USDC: Unveiling the Rise of Circle Empire

Source: Coin Metrics ATLAS & Reference Rates

Similarly, USDC is a key liquidity source for various DEX pools, facilitating stable-value trades. It is also increasingly underpinning on-chain foreign exchange markets, especially with the rise of other fiat-pegged stablecoins such as Circle's MiCA-compliant EURC.

Conclusion

The on-chain growth of USDC reflects the recovery of market confidence, but Circle's filings also highlight key challenges, particularly high distribution costs and heavy reliance on interest income. To maintain momentum in a low-interest-rate environment, Circle aims to diversify its revenue through active product lines such as Circle Mint and expand its tokenized asset infrastructure by acquiring Hashnote, the largest issuer of tokenized money market funds.

With increased regulatory clarity, especially the SEC's stance that stablecoins are not securities, Circle is well-positioned. However, it now faces increasingly fierce competition from overseas issuers such as Tether and a new wave of US competitors capitalizing on policy changes. Although Circle's valuation is yet to be determined, its IPO will mark the first opportunity for the public market to directly invest in the growth of stablecoin infrastructure.