Circle Defends USDC's Revenue Model as Stablecoin Competition Intensifies

Circle is defending how it divides USDC revenue between distribution partners, operating costs and profit, as competition puts greater attention on who receives the income associated with dollar-backed stablecoins.

In an October 16 company post, chief commercial officer Kash Razzaghi said Circle generated approximately $1.4 billion in first-half revenue and paid about $819 million in distribution and transaction costs. Circle put its net profit at roughly seven cents per revenue dollar. CoinDesk revisited the statement in a report published at 9:06 p.m. EDT on October 17, or 4:06 a.m. Sunday in Kyiv.

These are historical figures presented in a defense of the company's business model. They are not newly announced results for the current quarter.

A contest over distribution economics

CoinDesk framed the statement against competition from Open USD and other networks offering partners a share of reserve income. It reported that Coinbase, Circle's largest USDC distribution partner, also backs Open USD. Circle's post did not name that competitor directly.

Participation in a competing network does not, by itself, establish that a company has abandoned USDC. The narrower issue is whether distributors can obtain better commercial terms by supporting alternative products.

TTN's assessment is that distribution is a central part of this competition. For an issuer, a token needs places where users can acquire, hold and spend it. For a distributor, the commercial question includes the compensation received for bringing users and balances to that network.

Revenue sharing and holder returns are different

Circle says partners can receive a share of reserve income associated with balances they bring to its network. It also says standard customer redemptions remain free, typically settling through banking rails within two business days, while qualifying platform and payment flows can obtain faster settlement.

Those statements describe Circle's commercial and institutional services. They do not mean every retail holder receives reserve income, qualifies for direct redemption or has immediate access to dollars through every intermediary.

This distinction matters when comparing products. A distribution payment compensates a business within the network. A holder's redemption rights depend on the applicable terms and the route used to access the issuer. A token's market price is another separate consideration.

For the broader risk framework, see The explanation of stablecoins and depegging.

A stable balance can still produce changing revenue

Reserve-related income depends on both the amount of eligible assets and the return earned on them. In a simplified illustration, an unchanged reserve balance would produce less interest income if its yield fell. Growth in circulation could offset part of that effect, but would not establish how much income the issuer retains after partner payments and other expenses. This is an explanation of the business mechanism, not a forecast of Circle's results.

Distribution terms therefore belong alongside circulation when comparing stablecoin businesses. A partner that brings users may receive compensation, while the issuer bears other operating costs. Gross revenue can rise without the same percentage improvement in profit. The disclosed figures need to be assessed on their stated accounting basis and period, rather than using the token's dollar peg as evidence that the underlying business has fixed margins.

Headline payouts cannot settle the comparison

An issuer offering a larger revenue share may appear more attractive to a distributor. Evaluating that offer still requires examining the costs retained by the issuer, eligibility conditions and whether the arrangement remains viable under different interest-rate or usage assumptions.

Circle argues that compliance, liquidity and settlement infrastructure require continued spending. That is the company's commercial argument, rather than independent proof that its allocation is optimal or that competitors cannot offer better terms.

The evidence currently establishes a dispute over business models, not a measured migration of customers. Comparing the next set of financial disclosures, partner agreements and redemption terms would provide a firmer basis for judging the outcome than either side's headline payout promise. No evidence reviewed for this article establishes that USDC holders have lost redemption rights because of the competitive debate.