Circle Defends Stablecoin Economics as Coinbase Agreement Costs Reach $655.3 Million
Key Facts
Circle defended the distribution of revenue from its USDC stablecoin and spending on its infrastructure as distribution costs tied to Coinbase agreements reached $655.3 million in the first half of 2026, according to its filing with the U.S. Securities and Exchange Commission. These costs rose from $635.5 million in the corresponding period, representing amounts Circle incurs to compensate the platform under distribution agreements. The company said on its official blog that first-half revenue totaled about $1.4 billion. It allocated about $819 million of that to stablecoin distribution partners and transaction costs. The company described its net profit for the period as "7 cents" for every dollar of revenue.
In its breakdown of spending, Circle said it reinvested about $473 million in the first half in licensing, banking relationships, settlement liquidity, compliance, products and blockchain integrations. The company included these expenses in its defense of infrastructure operating costs and revenue distribution to partners. The reinvestment figure includes about $214 million in stock-based compensation and related costs, according to CoinDesk. For the second quarter, Circle reported net income from continuing operations of $48 million. The company attributed the year-over-year improvement primarily to lower stock-based compensation associated with its earlier initial public offering.
According to Circle's results, total revenue and reserve income reached $701 million in the second quarter, up 7% year over year. In the same period, costs under Coinbase agreements fell to $324.6 million from $332.3 million in the corresponding quarter. Reserve income alone totaled $668 million in the second quarter, up 5% year over year. The company said growth in average circulation offset some of the pressure from lower reserve yields. Across the first half, reserve income accounted for 94.6% of the company's total revenue and reserve income, according to its regulatory filing.
Average daily USDC circulation rose 31.7% in the first half, supporting reserve income, according to Circle's filing. The company attributed the expansion to growing demand, partnerships and integrations, while a 66-basis-point decline in average reserve yields, resulting from Federal Reserve interest-rate actions, limited its impact. At the end of the second quarter, circulation stood at $73.3 billion, up 19% year over year, according to the earnings release. On distribution, Circle cited Coinbase's results as showing that average stablecoin balances held in the platform's products reached a record $20 billion. That average rose 44% from the second quarter of the previous year.
Circle's defense also drew on the growing use of its stablecoin in global stablecoin transactions, according to its blog presentation. The company said USDC's share of that transaction volume reached about 77% in June, compared with 60% a year earlier. Meanwhile, Coinbase is co-founding Open Standard, the company associated with rival stablecoin OUSD, according to Stripe's announcement. Stripe confirmed that Open Standard is an independent company founded by Coinbase, Mastercard, Shopify, Stripe and Visa. Stripe says Open Standard partners can earn rewards based on stablecoin activity, including their balances held with the payments platform.
Among the terms for using the rival stablecoin, Stripe announced that businesses can convert between dollars and OUSD at no cost. The Solana Foundation said the stablecoin's reserves are held with BlackRock, Lead Bank and BNY. The foundation added that proof-of-reserves reports are published monthly. For Circle, the next financial disclosure will come on 4 November 2026, when it reports third-quarter results, according to the company's announcement. A live video webcast to discuss the results begins at 8 a.m. U.S. Eastern Time that day.