Circle Keeps Half. Coinbase Takes the Rest.

Circle issues USDC, the world's second-largest stablecoin. You'd assume that means Circle keeps the money USDC makes. It doesn't. For every dollar of reserve income the float throws off, Coinbase takes 50% of the residual. The headline metric for Circle isn't how much USDC is in circulation. It's how little of the yield Circle gets to keep.

Strip away the Arc-blockchain narrative and the payments-network slides, and Circle is still, at its core, a rate-sensitive money-market fund wrapped in a token. In Q1, 94% of revenue came from reserve interest. That's the strength — and the whole vulnerability. When the reserve yield slipped from 3.81% to 3.50% in a single quarter, it dragged the top line with it. Which is why the Fed matters here as much as crypto does: with Warsh's committee pushing rate cuts out to 2027, Circle's float keeps earning for longer. The macro that scares equities is, for once, the macro that pays Circle.

Circle built the rails. Everyone else is busy installing a toll booth on them.

The distribution squeeze is spreading

The Coinbase split was always the catch. Now it's a template. In May, USDC became the "Aligned Quote Asset" on Hyperliquid — meaning the exchange, not Circle, captures most of the reserve income generated by stablecoin deposits sitting on its platform. Compass Point estimated the arrangement could shave up to $80M off the combined annual EBITDA of Circle and Coinbase, and warned that other venues would line up to demand the same terms. The pattern is clear: whoever owns the user owns the yield.

• Circulation — growing; management still guides USDC toward a ~40% compound growth rate
• Reserve yield — falling as the rate cycle turns, the single biggest revenue lever
• Distribution share — rising, as every exchange that holds USDC now wants a cut of the float

So here's the tension worth holding in your head: USDC can keep winning the race to be the dollar onchain, and Circle's margins can still bleed at the same time — because the economics flow to whoever controls distribution, not to whoever issues the token. The dollar onchain is Circle's product. The leverage over it increasingly isn't. That's the question the next renegotiation answers, and it's the one to watch all the way into the back half of 2026.