Author: Sebastian Sinclair
Translated by: TechFlow
Circle CEO Jeremy Allaire speaking at Converge 2022
Image source: Nikhilesh De/CoinDesk (CC BY 2.0)
According to Circle's latest IPO filing, Coinbase receives half of the remaining income from Circle's USDC reserves, further deepening the connection between these two crypto giants.
The Tuesday-submitted document shows that Coinbase obtains 50% of the "residual payment base" - income explicitly derived from Circle's flagship stablecoin (USDC) reserves that are backed 1:1 with US dollars.
Circle's revenue is primarily generated through reserve assets, which are essentially composed of highly liquid US Treasury securities and cash equivalents.
In 2024, Circle's total revenue and reserve earnings reached $1.7 billion, reporting a net income of $156 million. Circle stated that it will focus on seizing the increasingly widespread global blockchain payment opportunities to further expand its business.
Symbiotic Relationship: USDC and Coinbase's Deep Binding
The document indicates that the proportion of income Coinbase receives from Circle's reserve is directly related to the amount of USDC held on the Coinbase platform.
If more USDC is stored on the Coinbase platform, the exchange's share of reserve income will increase; conversely, if users hold USDC directly through Circle or other platforms, Coinbase's income proportion will decrease.
This revenue-sharing agreement further emphasizes the symbiotic relationship between Circle's USDC and Coinbase that industry insiders have long been familiar with. As the largest USDC distribution partner, Coinbase has a significant impact on Circle's revenue stream.
USDC is the world's second-largest stablecoin, with a circulation of approximately $60.1 billion, accounting for about 26% of the global stablecoin market (source: CoinGecko).
The stablecoin was jointly launched by Circle and Coinbase in 2018 through the Centre Consortium, and after the consortium dissolved in 2023, Coinbase acquired a stake in Circle in August of the same year.
In 2024, the USDC held on the Coinbase platform represents about 20% of the total circulation, a significant increase from 5% in 2022, reflecting Coinbase's growing importance to Circle's revenue stream.
Despite the close partnership, Circle also notes in the document that this arrangement may pose potential risks. Circle emphasizes that its distribution costs and revenue sharing paid to Coinbase are directly influenced by Coinbase's business strategies and policies, which are beyond Circle's control.
To reduce dependence on Coinbase while competing globally with its main rival Tether (USDT), Circle is accelerating the international expansion of USDC. The company has recently partnered with several digital financial giants, including Grab in Singapore, Nubank in Brazil, and Mercado Libre in Latin America.
Circle plans to list on the New York Stock Exchange with the stock ticker "CRCL", but has not yet disclosed pricing details or the listing date.
