USDC Up 72% in 2025, Circle Paid $1.4B to Coinbase

USDC circulation grew 72% year over year to $75.3 billion in the fourth quarter of 2025, the company’s 10-K filing shows. Circle recorded full-year revenue and reserve income of $2.7 billion for 2025, up 64% from 2024.

The filing shows Circle incurred $1.4 billion in distribution costs tied to Coinbase in 2025, up from $924.5 million in the prior year. Those Coinbase-linked costs equaled roughly 51% of Circle’s total revenue and reserve income for the year. After distribution and transaction costs, Circle retained a 39% margin for 2025, the same margin reported for 2024. Distribution and transaction expenses consumed about 63% of Circle’s fourth-quarter reserve income.

The Coinbase-linked expenses reflect fees and economics tied to centralized distribution. Circle and Coinbase entered a collaboration agreement in August 2023 with an initial three-year term that runs through August 2026. The agreement allows both parties to discuss modifications before the initial term expires; if no amendment is reached, the contract automatically renews for another three years provided both parties continue to meet their obligations.

Alternative distribution and trading models affect how reserve income is split. Open USD, a consortium-backed model that includes major payments firms and more than 140 members, shares reserve earnings with distribution partners after deducting a management fee. Hyperliquid, a decentralized venue, uses an AQAv2 framework that directs roughly 90% of cost-adjusted reserve-yield revenue tied to aligned stablecoin supply back to the protocol.

Coinbase reported about $5 billion of USDC on Hyperliquid, and external on-chain estimates place USDC at roughly 97% of Hyperliquid’s stablecoin base. JPMorgan has flagged Hyperliquid’s model as a potential near-term earnings headwind for Circle and Coinbase and a longer-term pressure point on USDC economics.

Using a 3.5% reserve yield for illustration, a $6.16 billion aligned stablecoin base would generate about $215.6 million in gross annual reserve income; a 90% share to a distributor or protocol would equal roughly $194 million. The same yield on a $10 billion base would produce $350 million gross and $315 million at a 90% share. At $25 billion, the numbers would be $875 million and $787.5 million; at $50 billion, $1.75 billion and $1.58 billion. The AQAv2 framework applies cost adjustments, so actual amounts will vary.

Circle’s sensitivity analysis, holding USDC circulation and reserve allocation constant, projects that a 100-basis-point rise in interest rates would add $756 million to reserve income and $369 million to distribution and transaction costs. After those added costs, Circle would retain roughly $387 million of the incremental income, or about 51%.

Circle has received final OCC approval to establish a national trust bank. The company cites the federal charter as a regulatory credential that it now holds.

Future splits of reserve-yield economics will be influenced by whether Open USD gains adoption, whether Coinbase seeks modified terms in its August 2026 discussions with Circle, and whether other exchanges, wallets or DeFi protocols adopt revenue-sharing arrangements similar to Open USD or Hyperliquid. The 2025 figures show rising USDC supply alongside significant distribution costs and structures that allocate a large share of reserve-yield income to distributors and trading venues.