Circle's IPO Push, Coinbase's 50% Windfall: A Win-Win Game of Stablecoins
TechFlow Selected TechFlow Selected
Circle's IPO Push, Coinbase's 50% Windfall: A Win-Win Game of Stablecoins
The amount of USDC held on the Coinbase platform directly affects its revenue share from Circle, as Coinbase is the largest distribution partner for USDC.
Navigating Web3 tides with focused insightsAuthor: Sebastian Sinclair
Compiled 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 residual income from Circle’s USDC reserves, further deepening the ties between these two crypto giants.
Documents filed on Tuesday revealed that Coinbase is entitled to 50% of the "residual payment base"—the portion of revenue specifically derived from the assets backing Circle’s flagship stablecoin, USDC, which maintains a 1:1 peg with the U.S. dollar.
Circle generates revenue primarily from its reserve assets, which consist largely of highly liquid U.S. Treasury securities and cash equivalents.
In 2024, Circle reported $1.7 billion in total revenue and reserves earnings, with net income of $156 million. The company stated it is committed to capitalizing on the growing global adoption of blockchain payments to further expand its business.
Symbiotic Relationship: The Deepening Ties Between USDC and Coinbase
The filing indicates that Coinbase’s share of Circle’s reserve income is directly tied to the amount of USDC held on the Coinbase platform.
If more USDC is stored on Coinbase, the exchange’s share of reserve income increases; conversely, if users hold USDC directly through Circle or other platforms, Coinbase’s revenue share decreases.
This revenue-sharing agreement underscores what industry insiders have long known—the symbiotic relationship between Circle’s USDC and Coinbase. As USDC’s largest distribution partner, Coinbase significantly influences Circle’s revenue streams.
USDC is the world’s second-largest stablecoin, with a circulating supply of approximately $60.1 billion, representing around 26% of the global stablecoin market (source: CoinGecko).
The stablecoin was originally launched in 2018 through the Centre Consortium, a joint venture between Circle and Coinbase. After the consortium dissolved in 2023, Coinbase acquired an equity stake in Circle in August of that year.
In 2024, USDC holdings on the Coinbase platform accounted for about 20% of the total circulating supply—up significantly from 5% in 2022—highlighting Coinbase’s growing importance to Circle’s revenue.
Despite the close partnership, Circle noted in the filing that this arrangement could pose potential risks. The company emphasized that its distribution costs and revenue shares paid to Coinbase are directly affected by Coinbase’s business strategies and policies, which are outside of Circle’s control.
To reduce reliance on Coinbase and better compete globally with its main rival Tether (USDT), Circle is accelerating its international expansion of USDC. The company has recently formed partnerships with several major digital finance players, including Grab in Singapore, Nubank in Brazil, and Mercado Libre across Latin America.
Circle plans to list on the New York Stock Exchange under the ticker symbol “CRCL,” though pricing details and the exact launch date have not yet been disclosed.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
Decrypt
