Most of what USDC earns already goes to other companies, according to Circle. In a blog post published on Friday 16 October, Chief Commercial Officer Kash Razzaghi wrote that of roughly $1.4 billion in revenue and reserve income in the first half of 2026, about $819 million, or 59 cents of every dollar, went to distribution partners and transaction costs. Circle reinvested about 34 cents and kept about 7 cents as net profit, according to the post, titled “The Economics of USDC and Why Our Partners Win”.
The timing is the story. Two stablecoin networks are now pitching exchanges, wallets and payment firms the opposite deal: hand over most or all of the interest earned on the reserves. Circle did not name either of them.
The post refers only to “new entrants” that claim they can build a more “useful” stablecoin, and to new issuers promising to share the “substantial majority” of their economics. Reading that as a reply to Open USD, the consortium coin backed by Coinbase, Stripe and BlackRock, and to Paxos’s Global Dollar Network is the press’s interpretation. CoinDesk, which reported the post on 17 October, framed it that way while noting that Circle’s text does not mention Open USD by name.
Razzaghi’s case is that the costs behind a dollar token are real and someone has to carry them. “Circle shares the majority of USDC’s economics with the partners that drive its adoption,” he wrote. What the rivals leave out, in his words, is “a stablecoin that distributes everything but funds nothing.”
Circle USDC revenue in H1 2026: 59 cents of each dollar went out
The figures in the post line up with Circle’s quarterly report to the SEC. Its Form 10-Q for the quarter ended 30 June 2026 shows total revenue and reserve income of $1,395.4 million for the half year, of which $1,320.2 million was reserve income, the interest earned on the Treasuries and cash that back USDC. Almost all of Circle’s money still comes from that one source, and it depends on interest rates: the filing puts the reserve return rate at 3.5% for the half, against 4.2% a year earlier, on an average of $75.9 billion of USDC in circulation.
On the cost side, the filing has two lines that outlets have quoted as if they were one. “Distribution and transaction costs” came to $815.8 million in the first half. The wider “distribution, transaction and other costs” line reached $819.3 million, and Circle’s round $819 million matches that one. The gap, about $3.4 million, is why some reports say $815.8 million and others $819 million.
| Item, first half of 2026 | Amount | Q2 2026 alone | Source |
|---|---|---|---|
| Total revenue and reserve income | $1,395.4M | $701.3M | Form 10-Q |
| Reserve income | $1,320.2M | $667.7M | Form 10-Q |
| Distribution and transaction costs | $815.8M | $410.4M | Form 10-Q |
| Distribution, transaction and other costs | $819.3M | $412.5M | Form 10-Q |
| Distribution costs under the Coinbase agreements | $655.3M (H1 2025: $635.5M) | $324.6M (Q2 2025: $332.3M) | Form 10-Q |
| Net income from continuing operations | $103.5M | $48.2M | Form 10-Q |
| Share of revenue paid to partners and transaction costs | about 59 cents per dollar | n/a | Circle blog post |
| Kept for operations | about $473M (about 34 cents) | n/a | Circle blog post |
The 34 cents Circle keeps, about $473 million, pays for licences, banking relationships, liquidity, compliance, product work and integrations with new blockchains, the post says. Staff is the largest piece of it: the 10-Q shows $272.1 million of compensation expenses in the half, and $105.4 million of stock-based compensation in the cash flow statement.
Seven cents of profit per dollar matches the filing, which reports $103.5 million of net income from continuing operations in the half, a 7% margin. For a company collecting interest on more than $70 billion of reserves, that is thin, and the thinness is Circle’s argument. A rival promising partners far more has to find the money somewhere, by cutting costs Circle says it cannot cut or by charging for services USDC gives away.
Coinbase takes the largest slice of the distribution bill
Most of the 59 cents goes to one company. Circle’s post, citing Coinbase’s own second-quarter results, says the average amount of USDC held in Coinbase products reached a record $20 billion in the quarter, up 44% from a year earlier. Circle calls Coinbase its “largest and longest-standing partner”. Readers who hold USDC on the exchange can see how it presents the coin in our Coinbase review.
The 10-Q puts a number on it. Circle incurred $655.3 million of distribution costs “in connection with our agreements with Coinbase” in the first half of 2026, against $635.5 million a year earlier, and $324.6 million in the second quarter, against $332.3 million. On those figures Coinbase accounts for about four-fifths of the $815.8 million distribution and transaction line, and for roughly 47 cents of every dollar Circle took in.
The filing also describes how the money is split, in outline. Under the Collaboration Agreement, Coinbase receives allocations based on the USDC held on its platform after Circle’s issuer retention, plus half of the remaining amount tied to broader ecosystem growth, after payments to approved third-party participants under Circle’s Stablecoin Ecosystem Agreement. Circle accounts for the agreement as an executory contract, booked under distribution and transaction costs.
That formula explains why the Coinbase bill fell in the second quarter even as USDC grew. The 10-Q attributes the $7.7 million drop to a smaller Coinbase share of average on-platform balances. USDC held on Circle’s own platform averaged 19.5% of circulation in the quarter, up from 7.4% a year earlier, and the filing says that percentage is used to calculate Circle’s share of reserve income under the agreement. Over the half, payments to Coinbase still rose $19.8 million because reserve income was higher.
Circle’s chief executive Jeremy Allaire settled the renewal question on the second-quarter call on 5 August: “our agreement with Coinbase has renewed on its existing terms”, he told analysts, according to the transcript. Chief financial officer Jeremy Fox-Geen said revenue less distribution costs, the margin Circle tracks after paying partners, was 41.2% in the quarter, three percentage points higher than a year before.
Coinbase sits on both sides of the current fight. It is Circle’s largest distributor, and it is also one of the founding partners of Open USD. From 1 October, Coinbase users could send and receive OUSD on Base, Ethereum, Solana and Tempo, Crypto Briefing reported. Neither company has said it plans to move balances from one coin to the other. The 10-Q adds that Circle expects its distribution expense to rise as it adds distributors.
Redemption, banks and licences: the costs Circle says do not vanish
The core of Razzaghi’s post is a list of things an issuer pays for that a headline revenue split leaves out. Every Circle customer can redeem USDC for free, and redemptions over standard banking rails typically settle within two business days. Flows on the Circle Payments Network and qualifying customers building on Arc, Circle Mint or Circle Wallets can now redeem for free in near real time. To make that possible, Circle holds a large blockchain that runs exactly as written when it is called, holding and moving funds according to its code, without an intermediary able to change the outcome.">smart contract holding reserves of two or more tokens, supplied by users, that a decentralized exchange uses to execute trades automatically at a price set by a formula.">pool of cash at partner banks, ready to leave as soon as a redemption is confirmed onchain. That cash earns less than it would in Treasuries, and Circle says it carries the cost itself.
“The costs of redemption, compliance, and resilience don’t disappear just because the issuer declined to pay them,” Razzaghi wrote. Elsewhere he put it more bluntly: “Without that foundation, a stablecoin is not a digital dollar; it is a token.”
The volumes he cites are Circle’s own figures, not independently audited. Redemptions reached $71.8 billion in the first quarter of 2026. Mints and redemptions together came to $170 billion in the second quarter, up 105% from a year earlier, and topped $315 billion over the half, about $1.7 billion a day. Circle says USDC settled more than $36 trillion onchain in the first half, and that it carried about 77% of global stablecoin transaction volume in June, up from 60% a year earlier.
The post also lists what sits behind those numbers: more than 55 licences and registrations, among them an OCC national trust bank charter and MiCA compliance in the EU; more than 25 partner banks; compliance and sanctions programmes covering 185 countries; native deployments on more than 35 blockchains. Reserves sit in a government money market fund managed by BlackRock and held at BNY, with monthly attestations. Coindaro covered the geographic side two days ago in our report on Circle’s 40-market push.
One more claim targets consortium projects without naming any: more than 70% of the companies on recent consortium launch rosters already build on USDC, Circle says. The firms being courted by rival networks are, for now, mostly Circle customers.
Open USD and USDG offer distributors most of the interest
Open USD, or OUSD, was announced on 30 June 2026 with more than 140 companies on its list, The Block reported. The names include Visa, Mastercard, Stripe, Google, Shopify, BlackRock, BNY and Coinbase, as well as exchanges such as Bybit and OKX. According to The Block, businesses can mint and redeem OUSD without fees or volume limits, and most of the reserve income goes to participating businesses after “a small management fee”.
That fee has not been disclosed anywhere Coindaro could find, so a like-for-like comparison with Circle’s 59 cents is impossible for now. Open Standard, the independent operator behind OUSD, is run by founding CEO Zach Abrams, who founded Bridge, the stablecoin firm Stripe acquired, Decrypt reported. Circle shares fell nearly 16% on the news, according to the same outlet. OUSD went live on 30 September, with reserves held at BlackRock, Lead Bank and BNY, Crypto Briefing reported.
The Global Dollar Network, built around Paxos’s USDG, goes further on paper. Partners can receive “up to 100% of the reserve rewards generated by the USDG balances on their platforms”, plus rewards for activity that expands the network, according to the network’s own newsroom. The same page counts more than 150 partners, up from seven at launch in late 2024, and more than $3 billion of USDG in circulation, and lists Kraken, OKX and Robinhood among the exchanges carrying it. Those are the network’s own figures, and “up to” leaves the average payout unknown.
PayPal takes a different route with PYUSD. Its US website lists an annual reward rate of 4% on PYUSD balances for users who opt in and hold at least 1 PYUSD, a rate it says is subject to change. That money goes to holders, not to the platforms that distribute the coin.
Circle’s reply, on the August call as in the post, is that it already shares widely and has the partners to show for it. Allaire told analysts Circle had built “a network of more than 150 distribution partners that have an economic interest in embedding USDC”. Asked about the consortium coin, he said some of the firms that had announced involvement were taking an agnostic, “multi-coin, multi-chain” approach. The post adds Binance, which in September signed a five-year commercial agreement with Circle and invested $100 million in the company; CoinDesk reports the deal includes a fee tied to USDC held through Circle’s wallet service.
The race for wallets and apps is not new. Coindaro laid out how issuers court the platforms that put coins in front of users in our earlier piece on the stablecoin distribution race, including the first USDG reward-sharing offers. What has changed since is that a consortium with card networks and Stripe behind it is now live and promising the same thing at a larger scale.
Who keeps the interest: how stablecoin revenue works
A fiat-backed stablecoin issuer takes in dollars and holds them in short-term Treasuries, repurchase agreements and bank cash. The interest on those reserves is its income. For USDC it came to $1,320.2 million in the first half of 2026 alone. For newcomers, our guide to stablecoins explains how reserves and redemption work.
Under the US GENIUS Act, payment stablecoin issuers may not pay interest or yield to holders. The money therefore flows elsewhere: to exchanges, wallets and apps that hold and promote the coin, paid as distribution fees. So issuers compete on distribution terms rather than on rates for users. Allaire said on the August call that the law becomes effective in January 2027, as our GENIUS Act timeline sets out.
Two margin figures circulate and measure different things. The 41.2% revenue-less-distribution-costs margin for the second quarter is what is left after paying partners but before operating expenses. The 7 cents of net profit per dollar is what remains after everything else, staff and stock compensation included. Both are true at once.
Free redemption costs money because the issuer must keep part of the reserves in cash that can leave within hours, and cash at a bank earns less than a Treasury bill. The faster the promised redemption, the bigger that pool has to be.
What the fight means for USDC holders and the platforms that list it
For someone holding USDC, nothing in Circle’s post changes how the coin works: it remains redeemable one-for-one, and the post announces no new terms for users. The fight is between issuers and distributors, and its first effect is on bargaining power. An exchange or wallet with large balances can now point to an alternative offer when its contract with an issuer comes up.
For Circle’s shareholders, the question runs the other way. Distribution costs are already the company’s largest expense, close to three-fifths of revenue in the half. If rivals push up the price of distribution, the 7 cents could shrink.
In Europe, Circle presents its MiCA compliance as part of the regulated foundation rivals would have to match. Neither the AMF in France nor Consob in Italy has commented on the new partner offers. The yield-sharing contest is, for now, a US one.
Open questions and the next dates to watch
Several numbers that would settle the argument are missing. The Open USD management fee and the exact split of its reserve income have not been published. The real average payout under the Global Dollar Network’s “up to 100%” is unknown. The 10-Q describes the Coinbase formula but not the retention rate behind it. Circle has not said whether partners such as Binance, Kraken or Hyperliquid are renegotiating. On Hyperliquid, where about 90% of the USDC sat on Coinbase’s platform at quarter end, Fox-Geen said Circle was “not commenting in more detail” on the revenue share.
The next hard data should come with third-quarter results. Circle’s are expected in early to mid November, although the company has not confirmed a date, and its next 10-Q will show the Coinbase distribution line for the period in which OUSD went live. Coinbase’s own results should show whether USDC balances on the exchange held up after 1 October.