Circle Processes $32 Trillion in USDC Transfers as Interest Income Still Drives 95% of Revenue
For the three months ended June 30, reserve income accounted for $667.7 million of Circle’s $701.3 million in total revenue and reserve income, representing 95.2%. Transaction revenue was just $5.3 million. According to a report published by CryptoSlate, citing Coin Metrics and Circle’s financial disclosures, the figures underscore the gap between USDC’s transaction activity and Circle’s ability to monetize that activity directly.
USDC Volume Shows Scale, Not Direct Revenue
Coin Metrics’ $32 trillion figure represents adjusted USDC transfer volume through its August analysis. It is not equivalent to consumer payments, unique economic settlement or a full-year total. The associated annualized velocity estimate indicates how frequently the circulating supply changes hands relative to its size.
Much of that activity comes from crypto-native financial operations. On Base, 69% of USDC volume involved DEX liquidity provision and 23% involved flash loans. On Ethereum, flash loans represented 65% of volume.
These transactions support liquidity, collateral movements and arbitrage, but high gross transfer volumes do not necessarily represent an equivalent amount of new capital, purchases or fees paid to Circle. Flash loans, for example, are borrowed and repaid within a single transaction.
Coin Metrics also characterized its identified categories as lower-bound estimates. Approximately 8% of Base volume and 33% of Ethereum volume remained outside the categories it identified, potentially including payments, bridging and treasury activity.
Circle’s Revenue Remains Sensitive to Interest Rates
Circle reported that USDC onchain transaction volume increased 151% year over year to $14.8 trillion, while period-end circulation rose 19% to $73.3 billion. Total revenue and reserve income increased 6.6% to $701.3 million.
The company attributed about $147.4 million of year-over-year reserve-income improvement to a 25.2% increase in average daily USDC circulation. However, a 66-basis-point decline in average yields reduced the potential gain by about $113.9 million, leaving reserve income roughly $33.5 million higher.
Circle’s filings also show significant distribution expenses. Distribution and transaction costs reached $410.4 million, including $324.6 million in Coinbase-related distribution costs, while the figure rose to $412.5 million when other costs were included.
The company modeled a hypothetical 100-basis-point change from June’s average yield as affecting reserve income by about $737 million and distribution and transaction costs by about $360 million over the following 12 months.
Arc Offers a New Monetization Test
Circle is seeking to develop a more direct source of recurring revenue through Arc, its blockchain infrastructure. The network was in private mainnet with more than 100 builders as of Circle’s Aug. 5 statements, with public mainnet scheduled for Sept. 16.
Arc’s fee system uses USDC to denominate transaction costs, creating a direct fee mechanism around network activity. Whether that translates into meaningful recurring revenue remains unproven.
The ARC Token presale is separate from operating revenue. Circle agreed to sell 807.5 million tokens for about $242.2 million, with the Q2 filing recording the proceeds as deferred revenue rather than quarterly revenue. Any future transition from proof of authority to proof of stake or delegated proof of stake remains conditional.
The Sept. 16 public mainnet launch will therefore be an important milestone. Investors will be watching whether Arc generates sustained economic activity and, more importantly, whether that activity begins contributing materially to Circle’s transaction or subscription and service revenue.
Writer: Marcus RenfieldCrypto Market Analyst & Onchain WriterMarcus Renfield covers cryptocurrency markets with a focus on onchain data, Bitcoin price action, and emerging market narratives. His writing examines how capital flows, network activity, and broader market structure influence short- and medium-term trends.He aims to provide clear, data-informed analysis for readers seeking a deeper understanding of crypto market dynamics.