Circle Defends USDC Business Model as Stablecoin Rivals Offer Businesses Reserve Income
Circle is defending the economics of its USDC stablecoin business as competing projects seek to attract partners by sharing more of the income generated by reserve assets. The debate comes as Coinbase, Circle's largest USDC distribution partner, backs Open USD, a competing initiative designed to give businesses access to stablecoin reserve income after management fees.
In a blog post published Friday, Circle Chief Commercial Officer Kash Razzaghi said the company generated approximately $1.4 billion in revenue during the first half of 2026. Distribution and transaction costs reached $819 million, while the company retained about 7 cents in net profit for every dollar of revenue, according to Razzaghi's account.
The figures highlight a growing debate in the stablecoin industry over how revenue from reserve assets should be divided among issuers, distribution partners and participating businesses.
Circle Highlights the Costs of Operating USDC
Circle said the remaining $473 million after distribution and transaction costs supported compliance, liquidity and product development. That amount also included approximately $214 million in stock-based compensation and related costs.
Razzaghi argued that the expenses associated with operating a stablecoin issuer remain necessary even when a company chooses not to share reserve income with its partners.
"The costs of redemption, compliance, and resilience don't disappear just because the issuer declined to pay them," Razzaghi wrote.
The statement comes as alternative stablecoin models increasingly emphasize distributing reserve income to businesses and other participants. These arrangements could change how companies evaluate stablecoin partnerships, particularly when potential earnings from reserve assets become part of the commercial agreement.
Coinbase Backs Open USD Alongside Stripe and BlackRock
Coinbase, Circle's largest USDC partner, is also among the backers of Open USD, alongside Stripe and BlackRock. Unveiled in June, the initiative aims to allow businesses to mint and redeem stablecoins without fees while distributing reserve income to participants after deducting a management fee.
Open USD's OUSD token is now live. Although Circle's blog post did not directly name Open USD, the initiative represents one of several competing approaches to stablecoin economics.
Another competitor is the Paxos-led Global Dollar Network, associated with the USDG stablecoin, which also shares reserve income with participants. These models place greater emphasis on distributing some of the economic benefits generated by assets backing stablecoins.
For Circle, the challenge involves maintaining its existing distribution relationships while demonstrating that its approach can cover the costs of compliance, liquidity management, redemption and operational resilience.
Circle Expands Distribution Through Binance Partnership
Circle has also pursued additional distribution arrangements beyond its relationship with Coinbase. In September, Binance purchased a $100 million stake in Circle under a five-year agreement that includes a fee tied to the amount of USDC held through Circle's wallet service.
The arrangement adds another distribution relationship as stablecoin issuers compete for access to platforms and businesses that can expand adoption.
USDC Redemptions Remain Free Under Standard Terms
Circle said standard USDC redemptions remain free and typically settle within up to two business days. The company also said qualifying platform customers and payment flows processed through Circle Payments Network can access near-real-time redemptions at no cost.
As competing stablecoin initiatives offer different ways to distribute reserve income, the balance between partner incentives and operating expenses is becoming an important consideration for the industry. Circle's financial disclosures and commercial arrangements provide insight into its approach, while rival models seek to make stablecoin participation more attractive to businesses.
source: coindesk
Writer: Ethan Collins
Crypto Journalist
Ethan Collins reports on developments across the cryptocurrency and blockchain sector. His work covers market movements, protocol updates, regulatory changes, and emerging trends in digital assets.
He focuses on presenting complex topics in a clear and accessible manner for a broad readership.
Check out other news and articles on Google News
Disclaimer:
The articles on Hokanews are here to keep you updated on the latest buzz in crypto, tech, and beyond—but they’re not financial advice. We’re sharing info, trends, and insights, not telling you to buy, sell, or invest. Always do your own homework before making any money moves.
Hokanews isn’t responsible for any losses, gains, or chaos that might happen if you act on what you read here. Investment decisions should come from your own research—and, ideally, guidance from a qualified financial advisor. Remember: crypto and tech move fast, info changes in a blink, and while we aim for accuracy, we can’t promise it’s 100% complete or up-to-date.