Circle’s Next Chapter: Not Just Stablecoins, But a Payments Network

TradingKey - Stablecoins are meeting real-world demand, especially in emerging markets where payment systems are oftenfragmented, access to the traditional banking system is limited, or capital controls restrict seamless global flows. In many cases, stablecoins are solving for all of those at once — acting as a reliable gateway into the globalfinancial system with minimal friction.

On another front, stablecoins significantly reduce cross-border payment costs. That’s why major retailers,fintechs, and even banks are starting to look seriously at stablecoin rails. And now with the GENIUS Act passed,many of the long-standing regulatory question marks around stablecoin safety are easing — which could openthe door for even broader adoption in cross-border and institutional finance.Long story short: the stablecoin market is massive — and Circle is becoming one of its key infrastructure builders.

From Circle Q2 earnings: as of June 30,USDC—Circle’s dollar-pegged stablecoin—had a circulation of By August 10, that number hadgrown to 65.2 billion, reflecting approximately 6% quarter-to-date growth. In the earnings conference,management clearly stated its full-year target of 40% growth in USDC circulation.Still, Circle’s USDC market share has grown from a 2% in Q2 2024 to 10% in Q2 2025.

To diversify beyond USD-denominated markets, it launched EURC in 2024, a euro-backed stablecoin issued under a regulatory license in France. According to CoinMarketCap, as of Sep 18, 2025, EURC has grown into the world’s largest euro-denominated stablecoin, with a market cap of$247 million — up nearly threefold compared to the prior year.

Source: CoinMarketCap

Despite that progress, Circle — and the broader market — still await widespread real-world adoption ofstablecoin-based applications. As such, a temporary slowdown in USDC growth shouldn’t overshadow the bigger opportunity: whether Circle can scale its presence in cross-border and institutional payment flows to unlock moresustainable, scalable growth.

Payments Network: The Next Growth Driver

Circle made some real progress this quarter in building its foundational payments and infrastructure stack.Back in May, Circle launched the Circle Payments Network (CPN), a stablecoin-based platform for cross-bordertransactions. So far, it’s live in four markets — Hong Kong, Brazil, Mexico, and Nigeria — and has four activepartners: RedotPay, Conduit, Tazapay, and Alfred. Over 100 more partners are in the pipeline. Circle expects thenetwork to pick up real momentum in the second half of 2025.Once Circle’s payment network reaches a critical mass of users and institutional participants, the flywheel canstart to turn. More participants increase the utility and value of the network, which leads to more transactions,more liquidity, and more innovation—pulling in even more users, developers, and services in a powerful feedbackloop.Moreover, CPN is starting to generate new revenue, too. That includes transaction fees, network access charges,and FX spreads.

source: CIRCLE

Another new Infrastructure called Layer-1 chain Arc, which is fast (sub-second settlement), secure, and designed to meet key financial regulations,including Basel standards. As Allaire noted, no blockchain infrastructure to date has “met the most demandingrequirements of major financial institutions and enterprises.” Arc is being purpose-built to close that gap.Notably, Arc designates USDC as its native gas token and will also support other local stablecoins. As adoptiongrows in payment applications, gas fees are expected to become a meaningful source of non-reserverevenue—adding both technical and commercial value to Circle's overall revenue mix. Circle isn't just spending time building out the USDC payment ecosystem—it also needs time for the market toabsorb it, adopt it, and trust it. That kind of infrastructure doesn’t flip a switch overnight. I personally believe USDC’s circulation CAGR this year will come in below management’s 40% target, but if Circle’s network clicks,the compounding effect could be dramatic. That’s exactly why I framed this as a long-term investment at the outset.

Circle’s Core Business and Margin

As for now, more than 96% of total revenue is from interest income. When users want to get USDC — thestablecoin tied 1:1 to the U.S. dollar — they send dollars to Circle. That’s called “minting” USDC. It deposits thedollars into custodial reserve accounts, mostly invested in short-term U.S. Treasuries and other low-risk assets. For Q2 of fiscal year 2025, Circle reported total revenue of $658 million, up 53% year-over-year.That number is being driven by two key tailwinds. First, with USDC circulation expanding, Circle is sitting on a larger pool of dollar reserves—more capital that can earn yield. Second, Circle continues to benefit from thehigh-interest-rate environment, as its treasury and reserve assets see stronger returns.Circle’s longer-term growth engine lies not in interest income—but in something more durable.

Source: Tradingkey, Circle

The real upsidewill likely come from what it currently labels as “Other Revenue”, which includes things like blockchain rewards,cross-chain transfers, redemption fees, and yield product revenue (like from USYC).In Q2, other revenue came in at Also,management raised its full-year guidance for this category.

Reserve revenue growth came at a cost. Circle’s management is guiding for an RLDC (Reduced-Level Direct Contribution) margin of 37%. That’s a drop from 40% in Q1 and 42% a year ago. A key reason is the revenue-sharing agreement with Coinbase. Under the current deal—effective through 2026—Coinbase keeps 100% of the interest income on USDC held on its platform, and takes a 50% share of the yield generated from reserves held elsewhere. As a larger share of Circle’s reserves shift to Coinbase, Circle’s margins feel the squeeze.

Source: FXCintelligence

In November 2024, Binance was brought in as a new ecosystem partner—partly to balance against Coinbase’s influence. In practice, however, the revenue share offered to Binance appears relatively modest. The company is actively trying to diversify its distribution channels — it’s now on Ethereum, Solana, Polygon, Avalanche, Algorand, and more. It’s also building out Circle Mint, a wholesale and enterprise platform.

As Circle’s ecosystem matures and USDC finds its way into more use cases, platforms will have stronger incentives to support it based on user demand. In that scenario, distribution partners like Coinbase would hold less pricing power—and their leverage over Circle would gradually fade.

Competitive Landscape

there’s one crucial factor shaping the future of stablecoins, it’s this: whether Circle can catch up with Tether'shead start.Tether, for all its past controversies, simply got there first. With that first-mover advantage, it’s built a vastly deeperuser base over the years—particularly in emerging markets. In places like Southeast Asia, where other brand trustruns thin, Tether is already tightly integrated into most local exchanges. Everyday users often default to what works—that’s USDT. As it stands, USDC holds just over 20% market share in the global stablecoin market, while Tether enjoys acommanding lead at over 60%.

Source: Block

Where Circle shines, though, is on the compliance front—and that’s no small thing.Minting or redeeming USDC is done almost exclusively through regulated U.S. financial institutions. it significantlyexceeds the typical standards seen from many fintech or crypto-native firms.Tether, to its credit, has made compliance strides of its own. Historically, it’s faced questions over asset backing,audit transparency, and legal liabilities. But it’s now moving cautiously toward more formal audits and disclosures,slowly patching up the trust gap that’s shadowed it for years.That said, Tether has effectively ceded the U.S. market for now—primarily a consequence of regulators crackingdown and legacy legal baggage. Instead, Tether has dug in deep across emerging markets: Latin America, Africa,South and Southeast Asia. In many of these regions, the U.S. dollar still dominates informal economic systems,and USDT has become a de facto dollar-substitute for cross-border payments and local exchanges.But there's a twist coming. The U.S. “GENIUS Act” could mark a regulatory turning point. it opens a path forTether to make a compliant comeback. And here’s where it gets strategically interesting: Tether currently holdsmore than $127 billion in U.S. Treasuries. That’s not just a reserve backing peg stability—that’s a massive stake in U.S. debt markets. In practice, this aligns Tether’s interests with the very financial infrastructure it’s long beendistanced from.

Source: TradingKey

Meanwhile, as we said before, Circle is focused on building payments infrastructure and cross-border settlementrails. Its future depends on creating a robust ecosystem—of wallets, APIs, partners, and compliancechannels—that turns USDC into more than just a stablecoin, but a platform.So here’s the real question: in this race between Circle’s ecosystem-building and Tether’s compliance catch-up,which one shows results first?If Tether gets compliant before Circle hits scale, USDC’s growth strategy could meetchallenge. But if Circle can build a sticky, functional, mainstream-facing ecosystem before Tether clears itsregulatory hurdles, the tide could very well turn USDC’s way.And there’s more: traditional financial institutions are starting to roll out their own stablecoin products, too. Sowhile Circle built an early reputation for regulatory alignment, that’s no longer a moat — it’s just the starting line.

Valuation

USDC’s average circulation rose over 12% QoQ in Q2. However, Circle’s listing itself was arguably one of the biggest catalysts for USDC in the second quarter, so this catalystsmight not contribute to big growth in 2025H2.Another potential growth lever going forward is deeper liquidity on Binance. With Circle and USDC recently reintroduced and better integrated into Binance’s ecosystem. I’m forecasting 10% quarter-over-quarter growth inaverage USDC circulation in the second half of the year. Management now forecasts other revenues”—that’s the bucket that includes payment network income, infrastructure services, and anything nottied to interest income. Based on that guidance, full-year topline should come in around $2.715 billion.With RLDC margins guided at 37%, that gets us to roughly $555 million in adjusted EBITDA for the year.

It may hard to achieve critical mass in its payment network by 2027—meaning it doesn’t build real networkeffects in cross-border settlements—there’s a risk that revenue could fall short by as much as 40% versus currentinternal projections. But if they do get there, the upside is massive.Assuming network effects begin to compound, I expect revenue to reach 14 billion by 2030, delivering 3.23billion in net profit. Apply a relatively conservative 25x P/E multiple—roughly in line with traditional payment networks —and discount that back at 20%, I arrive at a target valuation that supports aprice of $152/share for Circle.

Source: Tradingkey

Risks

There’s still a lot of uncertainty baked into the story. Circle’s compliance edge has bought it valuable time—butthat window is narrowing. If competitors like Tether manage to achieve regulatory clarity and re-enter the U.S.market sooner than expected, it could deal a major blow to Circle’s lead.Then there’s the lingering question of alignment—how long will the strategic partnership with Coinbase continueto remain frictionless, and when will Circle’s payment network start contributing meaningful, recurring revenuebeyond interest income.Moreover, Circle also does not currently pay yield to retail users of USDC. Meanwhile, PayPal’s PYUSD offersusers 3.7%APY, paid monthly — incentivizing adoption and boosting retention. Should Circle introduce similarpayments, its margin profile would compress further.