CryptoSlate
USDC circulation grew 72% year over year to $75.3 billion in the fourth quarter of 2025, and Circle's full-year revenue and reserve income climbed 64% to $2.7 billion. None of it reached the bottom line the way the headline suggests: distribution costs tied to Coinbase alone hit $1.4 billion, up from $924.5 million in 2024, eating roughly 51% of total revenue. Circle's retained RLDC margin stayed flat at 39%, identical to the prior year, even as growth accelerated.
Why it matters
The 2025 numbers flip the usual stablecoin competitive story on its head. Investors spent years assuming the winner would be the issuer that commands the largest supply. Circle's 10-K points elsewhere: USDC can keep winning that count while the platforms holding the users decide how much of the economics behind that count actually flows back to the issuer.
The pressure is no longer abstract. Coinbase remains USDC's largest centralized distribution partner under an agreement set for renegotiation in August 2026. Coinbase is also a member of Open USD, a consortium of more than 140 firms including Visa and Mastercard, which shares reserve earnings with members after a management fee and gives Coinbase a benchmark for demanding better terms. On the decentralized side, Hyperliquid's AQAv2 framework routes roughly 90% of cost-adjusted reserve-yield revenue from aligned stablecoin supply back to the protocol itself. With USDC accounting for around 97% of Hyperliquid's stablecoin base and roughly $5 billion in circulation there, Hyperliquid is preserving USDC's liquidity dominance while still extracting the yield economics it generates.
Market impact
JPMorgan has flagged the structure as a near-term earnings headwind for both Circle and Coinbase, and a longer-term threat to Circle's USDC economics. Circle's own sensitivity analysis sharpens the read: a 100-basis-point rate increase would add $756 million to reserve income but $369 million to distribution and transaction costs, leaving Circle with $387 million, or 51%, of the incremental income.
Frequently asked questions
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Why did Circle's margin stay flat even though USDC supply grew 72%?
Distribution costs tied to Coinbase rose to $1.4 billion in 2025, up from $924.5 million in 2024, eating roughly 51% of total revenue and 63% of Q4 reserve income. Circle's RLDC margin held at 39% as a result.
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What is Open USD and why does it matter for Circle?
Open USD is a rival stablecoin model built by a consortium of more than 140 firms including Visa and Mastercard. It shares reserve earnings with consortium members after a management fee, giving distribution partners like Coinbase a benchmark for demanding more economics from Circle.
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How does Hyperliquid extract yield from USDC without replacing it?
Hyperliquid's AQAv2 framework routes roughly 90% of cost-adjusted reserve-yield revenue from aligned stablecoin supply back to the protocol. USDC still holds around 97% of Hyperliquid's stablecoin base, so the venue keeps USDC dominant while capturing the economics it generates.
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When does the Circle-Coinbase distribution agreement reset?
The current agreement was signed in August 2023 with an initial three-year term ending in August 2026. The companies can discuss modifications before that date, and the deal auto-renews for another three years if both sides continue meeting their obligations.
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What regulatory advantage does Circle hold over stablecoin rivals?
Circle recently received final OCC approval to establish a national trust bank, a federal charter that competitors without equivalent credentials struggle to match as distribution terms elsewhere tighten.
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