Circle (NASDAQ: CRCL) soared in 2025 thanks to U.S. ‘regulatory clarity,’ but can this momentum survive a ban on crypto platforms offering rewards for passively holding stablecoins like USDC?
Figures released Wednesday show Circle generated revenue (including income on the fiat reserves backing issued USDC) of $770 million in the three months ending December 31, 2025, 77% better than the total generated in Q424. Circle reported a $133 million profit, a significant turnaround from the $4 million profit the company booked in Q424.
The overwhelming bulk ($733 million) of Circle’s Q4 revenue was generated by U.S. Treasury bill interest. ‘Other’ revenue of $37 million represented a more than tenfold increase year-on-year (and $8 million better than Q3), with both subscription & services ($24.7 million) and transaction revenue ($12.2 million) showing strong sequential growth.
T-bill interest accounted for 95% of Q4 revenue (down just one point from Q3), but Q4’s interest rate was down nearly 0.7 points year-on-year. Worse, U.S. President Trump has indicated that he wants his next Federal Reserve chairman to push rates even lower. But strong growth in USDC’s market cap (see below) may allow Circle to offset the rate declines by boosting its overall T-bill holdings.
Notably, the Q4 revenue figure shrinks to $309 million once you subtract the ‘distribution costs,’ aka Circle paying digital asset platforms—including the Coinbase (NASDAQ: COIN) and Binance exchanges, as well as decentralized finance (DeFi) protocols—to promote USDC to their respective customers.
Regardless, that $309 million revenue figure represents a 136% year-on-year improvement, reflecting 2025’s surge in USDC’s market cap. As of December 31, USDC’s cap stood at $75.3 billion, 72% higher than the year before, and Circle said Wednesday that it expects a 40% compound annual growth rate going forward. Circle also projects its ‘other’ revenue will grow to between $150-$170 million in FY26.
For 2025 as a whole, Circle reported revenue of $2.75 billion (+64%) but booked a net loss of $70 million, a stark reversal from 2024’s FY profit of $157 million.
The net loss came amid soaring operating expenses, particularly in Q4, which saw a 95% year-on-year rise to $254 million. As with other publicly traded crypto operators, much of Circle’s costs surge was attributed to “higher compensation expenses” stemming from its listing on the Nasdaq last June.
Circle claims USDC’s on-chain volume soared 247% last year to $11.9 trillion. That sounds impressive, but multiple studies have shown that actual payments make up a very small slice of overall stablecoin volume. Instead, stablecoins primarily serve as one-half of a digital asset trading pair, and some studies claim other use cases actually declined last year.
Regardless, investors liked what they heard in Circle’s report, pushing its share price up 35.5% on Wednesday. The shares closed at $83.14, just below their year-to-date peak, but well below the nearly $300 all-time high the stock enjoyed in the immediate aftermath of last summer’s IPO.
It bears mentioning that some of Wednesday’s surge came courtesy of the rising tide lifting the BTC token, which went from below $63,000 on Tuesday to over $69,000 by midday Wednesday. Even the flailing Gemini (NASDAQ: GEMI) enjoyed a nearly double-digit gain on the day.
As always, the explanation behind BTC price pumps remains opaque, but the timing suggests the market is simply relieved that President Trump’s State of the Union address didn’t include a declaration of war against, well, everyone. And given that every recent BTC price surge has been undone by a flurry of ‘sell’ orders, maybe hold off on the celebrations just yet.
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‘Cautiously optimistic’ on stablecoin reward ‘compromise’
USDC’s market cap has dipped since the year began and currently sits at $74.8 billion, although that’s an improvement from the $70 billion year-to-date low at the end of January. That $5 billion+ plunge was fueled by uncertainty surrounding the passage of the U.S. Senate Banking Committee’s digital asset market structure legislation (the CLARITY Act) after Coinbase abruptly withdrew its support the night before a scheduled markup session.
Coinbase’s chief complaint with CLARITY was its proposed restrictions on third-party platforms (like Coinbase) offering customers ‘rewards’ for holding stablecoins like USDC. Coinbase relies on USDC for one-fifth of its revenue, even making money from USDC held off its platform, thanks to an overly generous arrangement with Circle.
(Yield v reward cheat sheet: Banks fear their customers will mass withdraw their deposits to chase greater returns via crypto platform rewards. So the banks want these platforms to be subject to the GENIUS Act’s ban on stablecoin issuers offering ‘yield’ to their customers. The exchanges say the banks are exaggerating the potential harms because they don’t want to boost the interest they pay on bank deposits to match what exchanges are offering.)
The latest word to emerge from the stablecoin stakeholders’ ongoing negotiations is that third-party platforms will have to forego offering rewards for customers passively holding stablecoins. Instead, rewards will be offered to customers who engage in certain stablecoin-based activities, the parameters of which have yet to be determined.
But if there’s been any additional progress made since last week’s White House meeting of stakeholders (the third such meeting), nobody’s saying so publicly. Meanwhile, the White House’s self-imposed March 1 deadline to resolve this issue and resume CLARITY’s forward progress ticks ever closer.
Asked about CLARITY on Wednesday’s earnings call, Circle CEO Jeremy Allaire said he was “cautiously optimistic” that “some compromise language” will result from the stakeholder squabble that allows the bill to pass before November’s midterm elections. Allaire said CLARITY’s passage would be “another significant unlock for building in this space,” just as GENIUS “has absolutely continued to be a tailwind for our business.”
Allaire couldn’t resist taking a veiled shot at Circle’s archrival Tether, issuer of the market-leading USDT stablecoin, which recently issued a U.S.-focused GENIUS-compliant token (USAT). While Tether currently has ties to some high-ranking figures in the Trump administration, USDT’s reputation as a tool of criminals and sanctions evaders hasn’t won Tether many regulatory friends in other markets.
Allaire said Wednesday that America’s ongoing efforts to integrate stablecoins into mainstream finance are “spilling over into international markets where international regulators are also saying, ‘okay, well, we now need to kind of acknowledge GENIUS-compliant stable coins as the sort of good stablecoins’ that could be allowed in their markets, and that’s really strong from our perspective.”
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Wheeling and dealing with humans and AI
Building on this momentum, Circle has been striking deals left and right to ensure USDC becomes the preferred dollar substitute for blockchain-based transactions, regardless of whether those transactions are conducted by humans.
Earlier this month, Circle struck a deal with the Polymarket prediction market to settle transactions natively in USDC. Currently, Polymarket users who want to use USDC as collateral for their bets, sorry, predictions, must use a Polygon-bridged version of USDC (USDC.e). The Polygon-based Polymarket now says it will transition to native USDC “in the coming months.”
Around the same time, the California-based tech startup funding platform Y Combinator announced that project founders could elect to receive their traditional $500,000 investment in stablecoins “like USDC.” Y Combinator added that “crypto-focused or not, we expect many YC Startups to use crypto in some way, from payments to banking to capital raising” due to stablecoins being “cheap, fast and global, using currencies people already trust.”
On the other side of the Pacific, the Circle Payments Network (CPN) recently added Philippine peso payouts via the Coins.ph digital wallet. In January, Coins.ph CEO Wei Zhou said stablecoins represented “the next phase of growth for crypto,” driven in part by international business remittances looking to eliminate the 6-8% fees charged by traditional payment channels.
Agentic AI is the new hot chick at the technology bar, and the race is on to integrate stablecoins into this sector to widen agents’ scope of activities. This month, Stripe announced it was launching “a preview of machine payments” that included support for the x402 agentic AI protocol using USDC on Base, Coinbase’s Ethereum layer-2 network.
On Wednesday’s call, Allaire claimed to have seen statistics indicating that “essentially 99% of agentic payments that have been measured over this recent period have been in USDC.” While Allaire cautioned that “I may be wrong about this” figure, he claimed USDC had “a first-mover advantage” in this area due to its presence on “over 30 blockchain networks.”
USDC recently put up a $30,000 prize pool for AI agents to participate in an “agent-powered hackathon” with categories including ‘agentic commerce’ and ‘most novel smart contract.’ Allaire called the contest “a powerful marketing activity where that collection of AI agents are now well educated about USDC.”
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Circle not afraid of competition, not responsible for BTC’s woes
There’s no question that USDC is benefiting from the rapid integration of stablecoin tech into tradfi operations under Trump 2.0. And with the market cap of Tether’s USAT still sitting at the $20 million it debuted with last month, it’s not yet clear if Tether plans to really push USAT as a USDC-killer.
USDC’s reputation as the anti-Tether (despite Circle’s less-than-laudatory reputation for aiding the victims of crime) may have helped its U.S. acceptance, but USDC faces threats on multiple fronts as institutions like JPMorgan (NASDAQ: JPM) and U.S. Bancorp (NASDAQ: USB) and established fiat payment rails (including Stripe) look to issue their own dollar-backed tokens.
Circle’s Q4 presentation claimed USDC has “durable network effects that cannot be easily replicated,” but money and political influence are great levelers. Still, Allaire expressed confidence when asked about USDC’s new competitors during a Wednesday appearance on CBNC’s SquawkBox.
Allaire argued that Circle was more than just a token, that it was “building an internet financial platform company that spans the operating system layer for how this infrastructure works … we’re building out this much broader infrastructure footprint to work with institutions within the stablecoin network world.”
Citing data from Visa (NASDAQ: V), with which Circle has partnered on payments initiatives, Allaire noted how USDC accounted for around half of all stablecoin transactions, “up from a third in the prior quarter, and the collected amount of transactions from all the other stablecoins that have launched basically rounds to zero.” Allaire added that Circle sees “opportunities to work with JPMorgan, and in fact, JPMorgan launched multiple initiatives last quarter that use USDC.”
Host Andrew Ross Sorkin closed by asking Allaire about BTC’s recent struggles and the increasingly popular theory that all the attention being lavished on stablecoins in Congress and in Wall Street boardrooms “is now crowding out the Bitcoin space” and keeping BTC from realizing its overinflated price targets.
Allaire appeared to agree, saying, “You’re seeing that decoupling” between BTC speculation and stablecoin utility. “And I think, you know, from our perspective… that’s great.” Perhaps realizing that he might have just fouled his own nest, Allaire closed by saying “I’m personally long Bitcoin,” suggesting that even utility types enjoy playing the lottery now and then.
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Source: https://coingeek.com/circle-2025-ended-on-a-high-but-can-they-keep-it-up-in-2026/
