Circle Defends USDC’s Economics as Rivals Offer Partners More Reserve Income

Table of Contents

• You might want to know


• Main Topic


• Key Insights Table


• Afterwards...

You might want to know

• Why does Circle argue that the income from USDC reserves cannot simply be distributed to partners?


• How could competing stablecoin networks change the financial relationship between issuers, platforms, and businesses?

Main Topic

Circle is defending the economics of its USDC stablecoin as some partners and competitors explore models that could give businesses a larger share of income generated by reserve assets. The debate centers on how that income should be divided among an issuer, its distribution partners, and customers, while still covering the operating costs involved in issuing and redeeming a stablecoin.

In a blog post published on Friday, Circle Chief Commercial Officer Kash Razzaghi said the company retained about 7 cents in net profit for each dollar of revenue it earned during the first half of 2026. Circle brought in about $1.4 billion over that period, while distribution and transaction costs totaled $819 million. Those figures have become part of a broader discussion about the costs behind stablecoin operations and who should benefit from the interest earned on assets backing tokens.

Circle said the remaining $473 million covered areas including compliance, liquidity, and product development. The amount also included about $214 million in stock-based compensation and related costs. These figures describe different parts of the company’s financial picture: distribution and transaction expenses, other operating needs, and the net profit figure cited by Razzaghi. They also provide context for Circle’s argument that reserve income supports the functioning and resilience of the service, rather than representing a pool that can be allocated entirely to partners.

Circle’s central point is that reserve income must help fund the responsibilities attached to issuing and redeeming USDC, including compliance, liquidity, and operational resilience. In Razzaghi’s words, “The costs of redemption, compliance, and resilience don't disappear just because the issuer declined to pay them.” This argument frames the dispute as a question of how to balance partner incentives with the resources required to maintain a stablecoin system.

The discussion has particular significance because Coinbase is Circle’s largest USDC partner while also backing a competing network called Open USD. Coinbase is joined in that effort by Stripe and BlackRock. Open USD was unveiled in June and is designed to let businesses mint and redeem stablecoins without fees. It also aims to pass reserve income to participants after deducting a management fee. The model presents a different approach to the distribution of income associated with reserve assets.

Circle’s post did not name Open USD directly. However, the comparison is evident in the broader market debate: one approach emphasizes the issuer’s need to retain funds for operating costs and system responsibilities, while another highlights the potential to return a portion of reserve income to participating businesses. Open USD’s OUSD token is now live, adding a concrete competitor to the discussion.

Open USD is not the only network pursuing a reserve-income-sharing approach. The Paxos-led Global Dollar Network, associated with the USDG token, also shares reserve income with participants. The presence of multiple alternatives suggests that stablecoin competition is increasingly about more than whether a token can be issued or redeemed. Commercial users may also compare fee policies, access to reserve-related income, redemption arrangements, and the services that support the token.

Circle’s position is that revenue-sharing proposals should be assessed alongside the costs and responsibilities that remain with an issuer. A business considering a stablecoin arrangement may find a no-fee minting or redemption offer attractive, or may value a share of reserve income. At the same time, the issuer must support the processes behind redemption, compliance, and liquidity. The amount and structure of any management fee, along with the precise services covered, therefore matter when comparing competing models.

Redemption terms are one area where Circle has emphasized its existing offer. The company said standard USDC redemptions remain free and “typically settle in up to two business days.” It also said qualifying platform customers and payment flows through Circle Payments Network can now access near-real-time redemptions at no cost. These statements distinguish standard redemption arrangements from the faster service available to eligible users and flows.

Distribution partnerships remain another important part of Circle’s strategy. The company has been working to secure additional partners beyond its existing relationships. In September, Binance bought a $100 million stake in Circle under a five-year deal. The agreement includes a fee tied to USDC held through Circle’s wallet service. The arrangement illustrates how distribution, ownership, and commercial fees can intersect in the stablecoin market, even as competing networks promote different ways to allocate reserve income.

For partners, the choice between stablecoin networks may involve evaluating more than a single headline figure. A larger share of reserve income could be valuable, but businesses may also consider the reliability of redemption, the availability of liquidity, compliance arrangements, integration requirements, and the issuer’s ability to support the product over time. Issuers, in turn, have to explain how revenue supports the services and safeguards on which users and partners rely.

The available information does not establish that one model is universally better. Rather, the competing approaches reflect different priorities and commercial structures. Circle’s published figures make its operating-cost argument more explicit, while Open USD and the Global Dollar Network illustrate a willingness to share reserve income with participants. How businesses weigh these differences will help shape which arrangements gain adoption.

Key Insights Table

Afterwards...

The competition over stablecoin economics raises broader questions about how digital payment systems should distribute the income generated by assets held in reserve. Further work is needed to compare the practical costs of redemption, compliance, liquidity provision, and technical resilience across different models. Clearer reporting on fees, income allocation, service levels, and operational responsibilities could help businesses make more informed choices without relying on headline claims alone.

Technology and policy research could also examine how faster settlement options function under varied market conditions, how reserve arrangements are communicated to users, and how platforms manage liquidity when redemption demand changes. These areas are relevant to issuers, payment providers, regulators, and businesses evaluating stablecoin infrastructure. As the market develops, transparent disclosures and reliable comparisons will be essential to understanding whether a revenue-sharing model can deliver value while preserving the services users expect.

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