Circle’s Q1 USDC revenue, profit dip; ARC presale wins

USDC stablecoin-issuer Circle (NASDAQ: CRCL) saw its Q1 profits slip but got a major boost from a nine-figure presale of its brand new Layer-1 network token. 

Figures released Monday show Circle’s total ‘revenue and reserve’ income hitting $694 million in the first three months of 2026, one-fifth higher than the same period last year. However, it’s down from the $770 million reported in Q4 2025 and from $740 million in last year’s Q3.

Circle’s revenue primarily comes from interest on the reserve assets backing USDC (mostly U.S. Treasuries), and while USDC’s market cap grew 28% year-on-year during Q1, the average 3.5% return on those T-bills was down by 66 basis points. Reserve income still managed to rise 17% to $653 million, while ‘other’ revenue from subscription & services and transactions doubled year-on-year to $42 million.

‘Distribution costs,’ aka the incentives that Circle pays crypto platforms—centralized exchanges like Coinbase (NASDAQ: COIN) and Binance, as well as decentralized finance (DeFi) protocols—to promote USDC use, lowered Q1’s actual revenue figure to $287 million. While this net revenue figure was up 24% year-on-year, it was also below the figures in Circle’s two previous quarters.

Circle’s net income from continuing operations fell 15% year-on-year to $55 million as operating expenses jumped 76% to $242 million. Circle blamed most of this rise on stock-based compensation that followed the company’s June 2025 listing on the NASDAQ exchange and related payroll taxes. However, even stripping out these giveaways, costs were up 32% to $136 million as Circle expands its product offering and infrastructure.

Circle celebrated USDC’s increasing share of the overall stablecoin pie, including 63% of Q1 transaction volume (according to Visa Onchain Analytics). On Monday’s analyst call, Circle CEO Jeremy Allaire claimed USDC’s Q1 on-chain transaction volume was up 263% to $21.5 trillion. However, he claimed “other third-party data sources” put this figure even higher at “nearly $30 trillion,” which would give USDC 80% of on-chain volume.

(The focus on on-chain volume is likely intended to distinguish USDC from Tether’s USDT stablecoin, which enjoys a significantly higher market cap ($189.6 billion to USDC’s $77.5 billion) and greater activity on centralized exchanges, where USDT serves as the primary trading pair for many prominent tokens.)

The Circle Payment Network (CPN) saw $8.3 billion in annualized transaction volume based on its March performance. Q1 brought the launch of CPN Managed Payments, which allows financial institutions to facilitate USDC payments while offloading responsibility for “digital asset complexity” to Circle.

Circle’s Cross-Chain Transfer Protocol (CCTP) hit “almost $50 billion” in volume during Q1 and Allaire said the company was now “opening up CCTP to other asset issuers,” both for stablecoins and real-world assets (RWA).

Allaire said the recent announcement by social media giant Meta (NASDAQ: META) to select USDC as the stablecoin for its trial of digital currency payouts to creators confirms USDC’s role as “the preferred option for major enterprises integrating this technology, and that it makes little sense for these companies to go it alone.” (See ‘Anchorage’ below.)

Circle is keen to expand USDC’s agentic AI possibilities, and Monday brought the launch of Agent Wallets, which allows agents to ‘permissionlessly’ build on-chain wallets and conduct USDC transactions. Agent Nanopayments will enable “high frequency machine-to-machine payments,” while Circle also debuted its new ‘agent marketplace’ for both users and agents.

Circle’s USYC remains, for the moment, the world’s largest tokenized money market fund. Circle recently announced plans to launch cirBTC, the company’s proprietary take on the concept of ‘wrapping’ the utility-free BTC token so it can be used on DeFi platforms.

Circle investors liked what they heard, pushing the share price up nearly 16% to $131.76 on Monday. Circle’s shares are up by two-thirds since the year began, although they’re still well off their high of $299 shortly after the IPO.

ARC gets its token

Allaire said Circle’s Layer-1 network ARC was “getting ready for liftoff” following its “highly successful” testnet. Circle’s Q1 was accompanied by news of the $222 million presale of ARC, Arc’s “native coordination asset” (aka token), giving the token a $3 billion valuation.

The sale was led by $75 million from the crypto unit of the Andreessen Horowitz (a16z) (NASDAQ: ZADIHX) venture capital group. Other participants included Apollo Funds, BlackRock (NASDAQ: BLK), NYSE parent company Intercontinental Exchange, Inc. (NYSE: ICE), and Standard Chartered Ventures.

The ARC token is intended to achieve “coordination” within the ARC “ecosystem,” aligning validators, builders, and other participants around “shared outcomes.” ARC’s three-layer system features “the network as the execution environment, stablecoins as the transactional medium, with the ARC token as the coordination mechanism.”

Circle will retain 25% of ARC’s token supply, prompting an analyst question about how future token sales might be “more broadly distributed.” Allaire said 60% of ARC is intended for “ecosystem grants, airdrops and other incentive programs that, ultimately, you know, Circle and the broader community over time would be, you know, interested in seeing.”

Asked how Circle might further monetize ARC, CFO Jeremy Fox-Green said “alternative” revenue streams could come from “running a validator on the Arc network” after it makes its proposed transition to a proof-of-stake transaction-consensus mechanism.

As Gizmodo put it, Circle appears eager to “starve” Ethereum, the network on which most DeFi platforms currently transact. USDC is the dominant DeFi currency, and while some rivals are attempting to challenge that supremacy (at least, on Solana), Ethereum’s already shaky finances could take a proper hit if even more DeFi transactions move to the Ethereum Virtual Machine-compatible Arc (or Coinbase’s Ethereum Layer-2 network Base).

Back to the top ↑

Circle welcomes US stablecoin rewards crackdown

Circle president Heath Tarbert added that CLARITY will give banks, broker-dealers, custodians, and other institutions the “legal certainty” and “permissibility” they need to engage in stablecoin-based activities “at scale.” Tarbert said Circle views CLARITY’s so-called stablecoin ‘compromise’ language as “the right answer” and “far superior to the status quo.”

Tarbert said incentivizing stablecoin use would provide a “flywheel” that will “drive growth that, quite frankly, no deposit substitute model can even match.” Tarbert said CLARITY will encourage stablecoin “payments, conversions, remittances, market-making activity, posting of collateral, and then things that are native to Web3, like staking and validation.”

Back to the top ↑

Anchorage says you’re nobody without your own stablecoin

While Circle aims to make USDC (and/or ARC) the token of choice for U.S. institutions, those institutions appear to have their own ideas. JPMorgan’s (NASDAQ: JPM) ‘deposit token’ JPM Coin launched last year, U.S. Bancorp (NASDAQ: USB) began testing its stablecoin on the Stellar payments network last November, Fidelity Investments launched its FIDD stablecoin in January, and Western Union’s (NASDAQ: WU) USDPT launched last week.

This custom stablecoin parade shows little sign of stopping. USDPT is issued by Anchorage Digital, the first crypto firm to be issued a U.S. national bank charter in 2021. At last week’s Consensus conference in Miami, Anchorage CEO Nathan McCauley said his company has “as many as 20 institutional issuers or large tech company issuers who are going to come in and issue their stablecoin with us.”

Unlike Circle, which wants its fingers in as many stablecoin-based pies as possible, McCauley said his company was seeing “banks that want to achieve a very specific objective … saying ‘hey, I’ve got a distribution channel where I can put my stablecoin to good use.’”

Anchorage has also issued Tether’s (purportedly) GENIUS-compliant stablecoin USAT, but McCauley’s firm appears eager not to be associated too closely with any one project. That includes the Global Dollar Network’s USDG stablecoin, which was issued in 2024 by Paxos and is supported by a consortium representing high-profile crypto firms like the Bullish (NASDAQ: BLSH), Kraken, and OKX exchanges, the Robinhood (NASDAQ: HOOD) trading platform, Galaxy Digital (NASDAQ: GLXY), and more. 

Anchorage is also part of this consortium, and McCauley said last week that his company is “still supportive of [USDG] and want to see it succeed, and are still part of the thing.” But McCauley said Anchorage’s role in USDG going forward might be “not as up-front of a role as before.”

McCauley said the shift was necessary for Anchorage to project “increased neutrality” toward the stablecoin market. “With us becoming a white-label stablecoin issuer for so many different groups, you start to think about what’s the incentive structure and is everything still aligned.”

Back to the top ↑

Kraken looks to Reap the benefits of infrastructure acquisition

Kraken’s parent company, Payward, recently announced the $600 million acquisition of Reap Technologies. Reap is a Hong Kong-based stablecoin-native, card-issuing, and payments infrastructure company that specializes in marrying digital assets with fiat systems for cross-border flow.

The deal, which is being financed via a mix of cash and stock, is intended to expand Payward Services, Payward’s own B2B stablecoin infrastructure platform. Payward has been on something of an acquisition spree, having last month paid $550 million for Chicago-based derivatives exchange Bitnomial, as well as last year’s deal for Backed (the company behind the xStocks tokenized equities standard) and the $1.5 billion deal for futures platform NinjaTrader.

Arjun Sethi, Kraken/Payward co-CEO, told Bloomberg the acquisition would boost the company’s presence in Asia, which he called “the fastest growing market … not just revenue but also asset-on-platform.” In turn, Payward’s licenses in the U.S. and Europe will boost Reap’s presence there, while both companies are aiming to expand their combined stablecoin reach into the Middle East and North Africa (MENA) and Latin American markets.

Reap’s co-founders Daren Guo and Kevin Kang issued a statement assuring their existing clients that the company “continues to operate as a standalone platform with the same brand, same roadmap, same commitment to the clients and partners who’ve built with us.”

Kraken/Payward filed its initial public offering paperwork confidentially late last year, and the Reap deal values the rapidly diversifying exchange at $20 billion. Kraken’s 2025 ‘financial highlights’ showed revenue of $2.2 billion and adjusted earnings of nearly $531 million.

Back to the top ↑

Liz Warren (still) doesn’t trust Mark Zuckerberg

In a blog post last week, Bitwise Asset Management’s chief investment officer Matt Hougan said the recent news of stablecoin integration plans by both Meta and food delivery outfit DoorDash (NASDAQ: DASH) has “increased my confidence that stablecoins will scale to trillions in assets and hundreds of millions of users.”

Hougan acknowledged that both firms’ stablecoin plans are currently just pilot programs, but nonetheless argued that these companies are embarking down this road because “stablecoins make global payments simple—one wallet address, no banking infrastructure, no currency conversions. For a global business managing millions of micropayments, that type of simplicity is worth a lot.”

Hougan suggests that stablecoins are “crypto’s most powerful on-ramp,” and could prove the thin end of the wedge in terms of lowering consumer resistance to the intricacies of digital assets. “Once someone has a stablecoin wallet, bitcoin and DeFi are one click away.”

Not everyone is as enthused. On May 6, Sen. Elizabeth Warren (D-MA) sent a letter to Meta CEO Mark Zuckerberg, claiming that the “lack of transparency regarding the details of Meta’s stablecoin-related plans is deeply troubling.” Warren cited Meta’s failed efforts to launch an in-house token (Libra/Diem) that died a few years ago due to regulatory pushback. (Remember regulatory pushback? Good times.)

Given the 3.5 billion users of Meta’s various digital products, Warren says, “any attempt to control, influence, or preference a stablecoin on Meta’s platforms—even a stablecoin issued by a third party—could have serious implications for competition, privacy, the integrity of our payments system, and financial stability.”

Warren had a list of questions for Zuckerberg, including whether the MetaPay wallet might undergo changes that would “enable users to store funds on the platform instead of merely storing payment credentials.” Warren also asked about Meta’s privacy guardrails, illicit finance controls, and the details of Meta’s commercial relationships with third-party stablecoin issuers.

Warren is seeking answers by May 20, but our fearless prediction is that Zuckerberg won’t respond at all, safe in the knowledge that Warren’s party is in the minority and can’t compel him to do much of anything. At least, not until after the midterm elections.

Back to the top ↑

Watch | Teranode & the Future of AI: Insights from Martin Coxall