Behind the 60 billion USDC: Uncovering the rise of the Circle empire

Circle, the largest US stablecoin issuer and the company behind the $60 billion USDC, recently filed for an IPO, providing insight into the financials and strategic outlook of this fundamental cryptocurrency company. As the only way to directly invest in the fastest-growing sector of cryptocurrency in the public markets, Circle's IPO filing comes at a critical time when stablecoin legislation is taking shape and competition is intensifying. While market conditions may delay the IPO, combined with USDC's on-chain data, we will extract key information from Circle's IPO filing, analyze its revenue sources, the impact of interest rates on its business, and the role of platforms such as Coinbase and BN in shaping USDC distribution, and evaluate Circle's positioning in an increasingly competitive market.

Circle Financial Overview

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

However, profitability compressed, with net profit and adjusted EBITDA falling 42% and 28% to $157 million and $285 million, respectively. Notably, Circle's financial data shows that revenue is highly concentrated in reserve interest income, and distribution costs with partners such as Coinbase and BN are as high as about $1.01 billion. But these factors drove a recovery in USDC supply, which grew 80% to $44 billion for the full year.

USDC's on-chain growth

USDC is the core of Circle's business and was launched in 2018 in partnership with Coinbase. USDC is a tokenized form of the U.S. dollar that allows users to store value in digital form and trade on blockchain networks, achieving near-instant low-cost settlement. USDC adopts a full-reserve model and is 1:1 backed by highly liquid assets, including short-term U.S. Treasuries, overnight repurchase agreements, and cash held by regulated financial institutions.

The total supply of USDC has grown to approximately $60 billion, firmly ranking second only to Tether's USDT. Although market share was under pressure in 2023, it has rebounded to 26%, reflecting the recovery of market confidence. Of this, approximately $40 billion (65%) was issued on Ethereum, $9.5 billion on Solana (15%), $3.75 billion on Base Layer-2 (6%), and the rest was distributed on chains such as Arbitrum, Optimism, Polygon, and Avalanche.

The speed and transfer volume of USDC have also increased significantly, with an average transfer volume of approximately $40 billion over 30 days. In 2025, USDC transfer volume occurred mainly on Base and Ethereum, sometimes accounting for 90% of total adjusted transfer volume.

These indicators show that the use of USDC is growing as stablecoins gain traction as an alternative to the US dollar in emerging markets and as payment and fintech infrastructure. This also reflects Circle's cross-chain strategy, with USDC generally 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 its reserves in a portfolio of highly liquid, low-risk assets such as short-term U.S. Treasuries and cash deposits. This structure enables Circle to earn income from its reserves while ensuring liquidity and redemption stability for USDC holders. Circle disclosed in the filing that reserve income in 2024 was $1.6 billion, accounting for 99% of total revenue, indicating that its income structure is highly dependent on interest rates.

USDC reserves are mainly held in the Circle Reserve Fund, an SEC-registered government money market fund managed by BlackRock. According to Circle's monthly proofs, financial statements, and BlackRock Circle Reserve Fund, as of April 11, $53.5 billion (about 88%) of USDC reserves consisted of U.S. Treasuries and overnight repurchase agreements with multiple financial institutions, all with maturities less than 2 months. In addition, 11% of reserves were cash deposited in regulated banks.

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

Our previous research on the decline in 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 income model to interest rate changes. What are Circle's prospects if the effective federal funds rate in 2024 is between 4.58-5.33%? In the S-1 filing, Circle estimates that a 1% drop in interest rates could result in a $441 million reduction in stablecoin reserve revenue, a key risk outlined in the filing.

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

Distribution, distribution, distribution

The role of Coinbase and BN

Circle's IPO filing also reveals the importance of partners such as Coinbase and BN in driving USDC adoption. In 2024, its distribution costs totaled $1.01 billion, a 40% increase from 2023 and a 150% increase from 2022.

While Coinbase's relationship with Circle is well known, the filing shows that the two are even more closely linked financially. In 2024, Coinbase earned $908 million from USDC-related activities, accounting for about 13.8% of its total revenue. Under its revenue-sharing agreement with Circle, Coinbase receives 100% interest on USDC held on its platform and 50% interest on USDC held elsewhere. With the supply of USDC on the Coinbase platform increasing from 5% in 2022 to 20%, most of the economic benefits appear to be attributed to Coinbase. The filing also disclosed a one-time payment of $60.25 million to BN to facilitate distribution in a similar manner.

Looking at spot trading activity on key partner trading platforms, USDC now accounts for 29% of BN's spot trading volume (about $6.2 billion), exceeding its share after the recent decoupling of FDUSD, second only to USDT, which accounts for about 50%. On Coinbase, USDC drives about 90% of spot trading in the combined USD and USDC market.

Despite the high costs, Circle’s distribution efforts have translated into significant adoption at the exchange level, driving USDC liquidity and $10 billion in trusted spot volume across exchanges.

Beyond Exchanges: Enabling DeFi and Commerce

By distinguishing between the USDC supply held in smart contracts and externally owned accounts (EOAs) on Ethereum, we can understand the distribution of USDC across user wallets and applications. Currently, about $30 billion is held in EOAs, up 66% year-over-year, while about $10 billion is in smart contracts, up about 42% year-over-year. The growth in EOA balances may reflect an increase in exchange custody and individual user holdings, while the growth in smart contracts indicates the importance of USDC as collateral in the DeFi lending market and liquidity on decentralized exchanges (DEXes).

USDC continues to play a fundamental role in the DeFi lending market, with protocols such as Aave, Spark, and Morpho locking in more than $5 billion (representing the portion of USDC supply that has not been lent out). For collateralized debt protocols like Maker (now Sky), around $4 billion of USDC supports the issuance of Dai/USDS through its PEG stablecoin.

Similarly, USDC is a key source of liquidity for various DEX pools, facilitating the trading of stablecoins. It also increasingly underpins the on-chain FX market, especially with the rise of other fiat-pegged stablecoins like Circle’s MiCA-compliant stablecoin EURC.

Conclusion

USDC’s on-chain growth reflects the return of market confidence, but Circle’s filing also highlights key challenges, particularly high distribution costs and heavy reliance on interest income. To maintain momentum in a low-rate environment, Circle aims to diversify its revenue through active product lines like Circle Mint and by expanding its tokenized asset infrastructure through its acquisition of Hashnote, the largest issuer of tokenized money market funds.

Circle is well-positioned as regulatory clarity improves, particularly the SEC’s stance that stablecoins are not securities. But it now faces increasing competition from overseas issuers like Tether and a new wave of U.S. competitors capitalizing on the momentum of the policy change. While Circle’s valuation has yet to be determined, its IPO would mark the first opportunity for public markets to invest directly in the growth of stablecoin infrastructure.