Circle, is it still worth buying

Author:Leo Z

 

I. Circe, what is it

Circle is the issuer of USDC. The USDC is the second-largest stable currency in the world, with approximately $77 billion in circulation, and each USDC has an equivalent dollar asset (mainly short-term United States Treasury debt) as reserve。

Circle's source of income is simple: It invests these reserves in United States debt and earns spreads. FY2025 Gross revenue of $2.75 billion, of which 95 per cent comes from reserve interest. In June 2025, the market value was about $15-20 billion。

The market price for Circle is essentially equivalent to "USDC traffic x interest rate x conservative multiple". This means that if you think that Circle is just a company that eats interest, the current price is roughly reasonable. If you think it is becoming a fee-based digital dollar infrastructure network, the current price is far from reflecting this part of the value。

The answer to this article is: is the transition happening? How much evidence? How much is it worth

II. CORE ISSUES: IS USDC "HELD" OR "USED"

Before discussing the valuation, one question is more important than any financial model。

Also USDC, $77 billion, if it is just a profit margin deposited by an institution, Circle is an interest-rate-sensitive financial firm that values 10-15 x. If it is being frequently used for payment, settlement, cross-border transfers and calls by developers, Circle is growing into a fee-based infrastructure network valued at 25-30x。

Two key data points will help you judge:

FIRST, USDC CHAIN TRADES ARE INCREASING AT A MUCH FASTER RATE THAN CIRCULATION. FY2025, USDC INCREASED ITS CIRCULATION BY 72 PER CENT, BUT CHAIN TRANSACTIONS INCREASED BY 247 PER CENT. THAT MEANS EVERY DOLLAR USDC IS BEING USED MORE FREQUENTLY. IT'S NOT "LARGER STOCK," IT'S "FLOW FASTER."。

Second, USDC has exceeded USDT to become the largest settlement asset. Visa Onchain Analytics removes about 85% of the chain noise (robots, intra-exchange transfers, high-frequency arbitrage). After the adjustment, USDC accounted for 64 per cent of the real economic settlement (Mizuho, February 2026), while USDT accounted for only about 28 per cent - although USDT was 2.4 times greater than USDC。

THIS GAP IN ITSELF IS THE STRONGEST SIGNAL: USDC IS MOVING FROM "PEOPLE'S ASSETS" TO "PEOPLE'S NETWORKS." BUT THIS TRANSFORMATION IS NOT YET COMPLETE — LATER ON, WHAT CONDITIONS IT NEEDS TO BE CONFIRMED。

III. THREE STRUCTURE OF INCOME

Circe's income is three tiers. Markets are now almost exclusively priced for the first tier。

First tier: USDC Interest income — Curcle, how do we make money today

USDC is the starting point for the Circle and is currently the source of 95% of the income. By the end of 2025, USDC was in circulation at $75.3 billion, an increase of 72 per cent over the same period, well above the annual growth target of 40 per cent for Circe itself。

The revenue logic is simple: USDC reserves are about 80 per cent invested in short-term United States Treasury bonds (USDXX funds managed through BlackRock) to earn spreads。

INTEREST INCOME AVERAGE USDC FLOW X RESERVE RATE OF RETURN

The reserve return of Q4 2025 was 3.81 per cent, down 68 basis points from the previous quarter. This exposes a core contradiction: the volume of flows is growing rapidly, but interest rates are falling and the two are hedged. If the Fed’s target interest rate drops to 3%, Circle needs USDC to grow to more than $150 billion to maintain current income levels。

Structural problems: Coinbase took most of the income. Under a split agreement signed in 2023, 100% USDC interest on the Coinbase platform is attributed to Coinbase, and 50% interest outside the platform is collected by Coinbase. FY2025, Circe, for every dollar of interest earned, approximately 60 is allocated to distribution partners。

The good news is that the profit margin is improving. The RLDC (renewe Less Distribution Costas) profit margin increased from 30.0 per cent in Q4 2024 to 40.1 per cent in Q4 2025. Net revenue ratio 1.2-1.8 per cent, offset by Coinbase ' s share and operating costs。

Second tier: payment and transaction income — new and growing business

This is the key to determining whether Circle can get rid of the "interest-rate company" label。

CPN (Circle Payments Network) came online in May 2025 to provide 7x24 cross-border settlements based on USDC for banks, payment companies and businesses. By February 2026, the annualization of TPV had amounted to $5.7 billion, an increase of about 100 times since it was on the line. 55 institutions are connected, 74 are under review, 500+ in Pipeline. It covers 14 markets in Brazil, Canada, Hong Kong, India, Mexico, Nigeria and the United States。

BUT $5.7 BILLION COMPARES WITH $16 TRILLION IN THE GLOBAL CROSS-BORDER PAYMENT MARKET, STILL LESS THAN FOUR PERCENT. THE VALUE OF CPN IS NOT IN TODAY ' S SCALE, BUT IN THE SUSTAINABILITY OF GROWTH. IF IT COULD TAKE A 1 PER CENT SHARE OF THE CROSS-BORDER MARKET, IT WOULD BE $160 BILLION IN ANNUALIZED TRANSACTIONS — A COMMISSION THAT COULD BE CLOSE TO OR EVEN EXCEED INTEREST INCOME AND WOULD NOT BE AFFECTED BY INTEREST RATES。

The CCTP (trans-chain transfer agreement) enables the U.S.S.DC to move itself across the chain by "destruction-casting". Q4,2025 disposed of $41.3 billion, 3.7 times the same increase. USDC's cross-chain market share rose from 25% at the end of 2024 to 62% in January 2026, covering 30 chains. CCTP V2 introduced Fast Transfer fees - a new source of income。

Other Revue (non-interest income) is the most direct "proof of transformation". FY2025 increased from $3 million to $37 million/quarterly, including $24.7 million for subscription services, $12.2 million for transaction income and $7 million for Canton Network certification node. Management guidance $150-170 million in 2026。

This part of the income is not affected by interest rates and does not need to be split with Coinbase. When it exceeds 10 per cent of total income, the market may start looking at Circle using different valuation methods. Currently about 4 per cent。

Third level: settlement platform — long-term possibilities

Arc is the corporate clearing chain of the online main network planned by Circe in 2026. The testing network has now processed over 160 million transactions, confirming the time of 0.5 seconds, 100+ agency participation (including Goldman Sachs and Masters)。

The Arc road map consists of four phases:

M1 PUBLIC TESTING NETWORK (COMPLETED) M2 REAL FUNDS UPLINK (2026) M3 BONDS/COLLATERALS/SETTLEMENT SCENES (2027-28) M4 FOR STANDARD OPERATING PROCEDURES (2029-30)

Before M2, Arc's value was zero. But if it eventually becomes an institutional-level settlement standard, the value of Circle is no longer a "fee-paying company" but a "platform company". This is a requirement for a return of more than 10x。

IV. Whether or not the transition is taking place: seven dimensions

Any indicator alone is easily miscalculated. The key is to see if multiple dimensions are improving at the same time — when scale, dynamism, profitability, new income, and user growth point in the same direction。

V. Three most important tracking indicators

1 USDC TRAFFIC (PER DAY)

Circle income base. Liquidity x reserve rate of return = interest income. It is important to keep track of "quarterly average traffic" rather than end-of-cycle snapshots. Currently about $77 billion。

source: defillama.com/stablecoin/usd-coin (daily update), circle.com/transparency (weekly reserve certificate)

Share of USDC in 2 Visa adjusted transactions (weekly)

ANSWER THE QUESTION: USDC IS USED OR HELD. SUPPLY IS ONLY 25 PER CENT, BUT ADJUSTED TRANSACTIONS ACCOUNT FOR 64 PER CENT - USDC DOES 2-3 TIMES MORE WORK THAN USDT。

Data source: visaonchainanalytics.com →Show % of Total→ Read USDC

3 Other interest income (quarterly)

The only indicator that can directly prove that Circle earned money outside of interest. Not affected by interest rates, not divided with Coinbase. Currently $37 million/season, directs $150-170 million (2026). The valuation method changes when 10 per cent of total income is exceeded。

Source: Circle.com/pressroom (quarterly financial report), SEC EDGAR Search for Circle Internet Group

VI. Recent catalysts

Coinbase breakout (August 2026)

This is the largest single catalyst in 24 months. Circle currently distributes about 60 percent of its income to partners. If the RLDC profit margin rises from 40% to 50-55% after renegotiation, the effect is an instant increase of 25-35%. But Coinbase has no incentive to make big concessions — USDC distribution on the Coinbase platform remains the biggest growth engine for Circe. The results are uncertain, but the direction is more likely than the current situation。

OCC NATIONAL TRUST BANK LICENCE PLATE

CONDITIONAL APPROVAL WAS GRANTED IN DECEMBER 2025. FULL APPROVAL MEANS THAT IT IS POSSIBLE TO OPEN THE FED’S MAIN ACCOUNT DIRECTLY (PROFITING IORB INTEREST RATES, ELIMINATING COUNTERPARTY RISKS), BYPASSING COMMERCIAL BANKS IN PROCESSING $483 BILLION IN CASTING/FORECLOSURE FLOWS PER YEAR, AND CREATING AN INSURMOUNTABLE TRUST BARRIER FOR BUSINESSES AND GOVERNMENTS TO ADOPT USDC. NO OTHER STABLE ISSUER HAS THIS。

x402 Foundation (established in April 2026)

Coinbase contributes x 402 payment agreements to Linux Foundation. x402 Activate HTTP 402 status code as an Internet primary payment layer, allowing AI angent, API and applications to settle directly in HTTP interaction - default USDC。

Participants: Google, AWS, Stripe, Visa, Mastercard, Amex, Shopify, Microsoft, Cloudflare, Circle. If x402 becomes the AI anent payment standard, each machine's microtrading to the machine pushes up USDC usage without the need to increase holdings。

Note: x402 is Coinbase, not Circle. Impact on CRCL: Moderately, expanding the use of USDC without changing the size of the base。

Conditions of return

3-5x (high confidence) - pure USDC growth

USDC presses 40% CAGR to about $200-300B in 2028. Even if interest rates fall to 3 per cent, $250B x 1.5 per cent net spread = $3.75 billion net income. 20x, market value $75 billion. From the current $15-20 billion to $75 billion, about 4x. No contribution by CPN or Arc is required。

10x (a combination of multiple conditions required)

FROM $15-20B TO $150-200B, IT SHALL OCCUR SIMULTANEOUSLY:

1. CPN TPV BREAKTHROUGH $100 BILLION IN 2-3 YEARS, AT LEAST ONE MAJOR CORRIDOR ENTERING FORMAL PRODUCTION

2. Coinbase Improved split agreement, RLDC 50% profit margin +

3. Other Revue exceeds 10 per cent of total income and confirms the existence of sizeable non-interest income

4. Arc has reached at least M2 (real capital uplink) and started to be market-pricing

only the second of these four conditions (profits) is currently clearly improving. 10x is a position where you make money, not a position where you make money。

VIII. Main risks

INTEREST RATE DOWN FASTER THAN USDC GROWTH

Q4,2025 has already shown this signal: interest rates have fallen 68bps, partially offset by 100% growth in circulation. If Fed falls to 2.5-3 per cent in 2026-2027, there may be 1-2 quarterly windows where profits are lower than expected。

Tether Compliance

The greatest differential advantage of USDC is compliance. However, Tether earned $10 billion in the first three quarters of 2025 and is negotiating a full audit with four leading accounting firms. If Tether is granted compliance status within 2-3 years, the differential advantage of USDC will be significantly diminished. USDT is currently over 60 per cent marketable at $183.0 billion - it has sufficient resources。

New Stable Currency of Gain Competition & Stripe etc

New stable currencies such as Ethena (USDe) and Sky rob market shares by paying the holders directly. Circe is restricted to the location of regulatory compliance and cannot currently pay interest directly to USDC holders。

Stripe is a founding member of x402 Foundation and is also building its own stable currency payment system. Stripe's strategy is to access all possible winning standards... Its inclusion does not represent exclusive support for USDC, nor does it preclude Stripe from introducing its own stabilization currency or deep integration of USDT in the future。

Conclusions

"Circle is not a company that is sure to become a trillion-dollar class." But it may be one of the few financial technology companies that have the structural conditions to touch this ceiling。
The current pricing reflects almost only USDC interest income. The market is asking: Is Circle an interest-rate-driven financial firm or a charge-backed digital dollar infrastructure? The answer is not yet certain — but the data is leaning towards the latter。

AT THE HEART OF THE TRACKING IS THREE THINGS: WHETHER USDC FLOWS ARE GROWING, WHETHER EACH DOLLAR USDC IS BEING USED MORE FREQUENTLY, AND WHETHER INCOME OTHER THAN INTEREST IS GROWING. WHEN THESE THREE IMPROVE SIMULTANEOUSLY, TRANSITION TAKES PLACE。

 

Source: Circle IR, SEC EDGAR, DefiLlama, Visa Onchain Analytics, Artemis Terminal, CoinDesk, Mizuho Research

Disclaimer: This does not constitute an investment proposal. All data up to April 2026。