Circle's interest income falls as rates drop, and a token sale fills the gap

Circle, the company behind the dollar stablecoin USDC, said on 4 November that its revenue rose 17% from a year earlier to $865m in the third quarter. The growth did not come from its main business. Interest earned on the reserves backing USDC fell 8% to $658m. The total was lifted by $182m from a presale of ARC, the token for a blockchain Circle opened to the public on 16 September. Without that sale, revenue would have been about $683m, below the $740m of a year earlier.

A stablecoin issuer makes money by holding the dollars customers hand over in cash and short-term government debt, and keeping the interest. That depends on two things: interest rates and how many tokens are in circulation. Both are now working against Circle. The return on its reserves was 0.61 percentage points lower than a year earlier. Average USDC in circulation grew 8% to $73.3bn, too little to make up the difference. In the second quarter, average circulation had grown 25%.

Circle also hands much of what it earns to the exchanges and apps that hold and promote USDC. In the quarter it paid $409m to these distributors and in transaction costs, leaving it 38% of its reserve income, against 37% a year earlier. Circle said these costs fell 8%, mostly because it paid distributors less. Net income from continuing operations rose 5% to $226m.

The size of USDC has stalled. Circle's balance sheet shows $73.5bn owed to holders of its stablecoins at the end of September, down from $74.9bn at the end of 2025. Blockonomi, a trade site citing the company's figures, puts USDC in circulation at $73.9bn at the quarter's end, unchanged on a year earlier. Crypto.news reports that USDC's share of the stablecoin market slipped to 27%. Circle has kept its target for USDC circulation to grow by 40% a year over several years.

Circle's bet beyond interest is payments. Its network for banks and payment firms that settle cross-border transfers in stablecoins was handling payments at an annual rate of $41.3bn. Circle has also agreed to buy Tazapay, a Singapore firm that handles more than $25bn a year in cross-border payments between businesses, about 60% of it already involving stablecoins. The deal needs regulators' approval and is expected to close in 2027. Circle's release gives no price; crypto.news puts it at about $400m in shares. "In Q3, we saw continued proof that institutions are building and expanding on USDC," said Jeremy Allaire, Circle's chief executive.

How long token sales can stand in for interest is unclear. Circle expects $310m to $330m of revenue outside reserve income this year, and says that figure includes the token presale. Crypto.news also reports that Circle cut about 5% of its staff during the quarter, which the release does not mention. Coverage so far comes from crypto trade sites.