The recent IPO filing of Circle, the issuer of USD Coin (USDC), has unveiled a striking revenue dynamic: Coinbase earns more from USDC than Circle itself. This revelation highlights Coinbase's dominant position in the crypto ecosystem, even as Circle prepares to go public.
Key Insights from Circle’s IPO Filing
- Revenue Comparison: Circle reported $1.7 billion in revenue for 2024, with a $285 million EBITDA. However, its largest expense—$908 million—went to Coinbase for USDC distribution.
- Coinbase’s Advantage: After accounting for USDC rewards, Coinbase’s net earnings from USDC are more than double Circle’s profits.
- Interest Rate Sensitivity: Circle estimates a potential $414 million profit loss if the Federal Reserve cuts rates by 200 basis points, underscoring its reliance on interest-bearing reserves.
USDC’s Market Performance
- Growth: USDC’s circulating supply surged 78% in 2024, reaching a $60 billion market cap—second only to Tether (USDT).
- Adoption: Since its 2018 launch, USDC has facilitated $25 trillion** in on-chain transactions, with over **$1 trillion minted/redeemed. It’s now supported natively on 19 blockchains.
Financial Trajectory: Circle vs. Coinbase
| Metric | Circle (2024) | Coinbase (Q4 2024) |
|---|---|---|
| Revenue | $1.7 billion | $2.3 billion |
| EBITDA | $285 million | N/A |
| Largest Expense | $908M (Coinbase) | N/A |
| Net Profit | $221.6 million | N/A |
👉 Explore how Coinbase leverages USDC for revenue
Competitive Landscape
- New Entrants: PayPal and Ripple have launched regulated stablecoins, intensifying competition.
- Coinbase’s Edge: Its exchange dominance ensures a steady stream of transaction fees and USDC-related revenue.
FAQ Section
Q1: Why does Coinbase earn more from USDC than Circle?
A1: Coinbase controls USDC distribution and earns fees from trading/redemption, while Circle’s profits rely heavily on interest from reserves.
Q2: How does USDC’s growth compare to other stablecoins?
A2: USDC is the second-largest stablecoin (after USDT), with a $60B market cap and 78% supply growth in 2024.
Q3: What risks does Circle face?
A3: Interest rate cuts could slash Circle’s profits by $414M. Competition from PayPal and Ripple also poses challenges.
Q4: How has Circle’s financial health improved?
A4: After a $758M loss in 2022, Circle rebounded with $221.6M net profit in 2024, driven by USDC adoption.
👉 Discover crypto revenue streams like Coinbase’s
Conclusion
While Circle’s IPO marks a milestone, Coinbase’s revenue superiority from USDC underscores the power of distribution networks in crypto. The stablecoin wars are heating up—will Circle’s IPO give it the edge it needs?