Earnings Call Transcript - CRCL Q1 2026

Operator, Operator

Ladies and gentlemen, thank you for joining us, and welcome to Circle Internet Group's First Quarter 2026 Earnings Call. Operator instructions were provided. I will now hand the conference over to Scott Blair, Circle's Head of Strategic Finance. Scott, please go ahead.

Scott Blair, Head of Strategic Finance

Thank you, operator, and good morning. I'd like to welcome you to Circle's First Quarter 2026 Earnings Conference Call. I'm Scott Blair, Circle's Head of Strategic Finance. I'm joined by Jeremy Allaire, our Co-Founder, Chief Executive Officer and Chairman; and Jeremy Fox-Geen, our Chief Financial Officer. Earlier this morning, we posted our earnings press release and earnings presentation on the Circle Investor Relations website, investor.circle.com. A transcript of this call will be posted on that website once available. I need to remind everyone that our earnings press release, presentation and this call contain statements that are forward-looking. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in our SEC filings. Additionally, nothing in this presentation constitutes an offer to sell or a solicitation of an offer to buy securities or an invitation or inducement to engage in investment activity. We will also disclose non-GAAP financial measures on this call today. Definitions of those non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures can be found in the earnings press release and earnings presentation, which are posted on Circle's Investor Relations website, investor.circle.com. Non-GAAP financial measures should be considered in addition to, not as a substitute for GAAP measures. With that, I'd like to turn the call over to Jeremy Allaire.

Jeremy Allaire, Co-Founder, Chief Executive Officer and Chairman

Thank you, Scott, and good morning, everyone. I want to begin at a higher level and describe where I think we are and the guiding forces driving Circle's thinking and strategy. We believe we are going through the largest platform shift in the history of the Internet and it is accelerating. Specifically, this platform shift is the collision and compounding effect of new operating systems for intelligence and new operating systems for economic activity. These two major new technology infrastructures are converging into a new Internet stack that we believe will transform the global economic system over the coming decade. Last quarter, we talked about the rise of AI agents and the Agentic economy and the need for these AI agents to operate on economic infrastructure that enables trusted value exchange and economic coordination. We also talked about the next generation of blockchains forming into economic OSs where value, identity, policy and contracts can execute and move across these new on-chain computer networks. We are rapidly moving into a world in which AI-powered software machines, coordinating on blockchain computers, deliver an increasing share of global economic activity. This is a profound shift and one that is highly aligned with Circle's fundamental vision, mission and strategy. We are building a leadership position in this new era from a position of considerable strength. Over the past several years, we have built out a broad-based Internet financial platform that compounds through several reinforcing flywheels. Each pillar of Circle's platform is self-reinforcing. Our digital assets flywheel, encompassing our stablecoin network and core digital assets, drives increasing liquidity, utility and developer integrations, which in turn continues to grow the value of the network. The Arc network, or what we call Arc, is entirely built on network flywheels and grows as more apps are launched, more assets are issued and as liquidity and distribution flow through our interoperability infrastructure. These flywheels accrue to Arc network stakeholders, but also reinforce and help grow Circle's other platform pillars. Both of these, in turn, grow the flywheels for our own apps. Together, Circle's apps, including CPN and Circle Mint, continue to drive more use cases, greater transaction volume, user growth and distribution. Our apps are anchored in Circle's digital asset network and are being built natively on Arc. These flywheels work together to create one of the most compelling Internet financial platforms in the world, and now we are layering across this entire platform the deep product and technology capabilities to compound alongside AI and Agentic economic growth. Now turning to the quarter. I want to focus on a few key highlights. First, we ended the quarter with $77 billion of USDC in circulation, representing 28% year-over-year growth. Alongside USDC supply growth, we also saw enormous growth in transaction activity with on-chain transaction volume up 263% to $21.5 trillion. Total revenue and reserve income of $694 million grew 20% year-over-year. Adjusted EBITDA grew to $151 million, 24% year-over-year growth, and we continue to maintain a strong adjusted EBITDA margin of 53%. We've also had a number of major platform and product launches recently, including today's launch of our new Circle Agent stack, which I'll discuss in greater detail shortly. We launched CPN managed payments, which brings the power of CPN to banks, financial institutions and payment service providers in a turnkey fashion, and we continue to see robust growth in CPN volumes and financial institution adoption while also seeing many more mainstream USDC launches and integrations. Finally, the Arc network is getting ready for lift off. We have had a highly successful testnet. And today, we announced the presale of the Arc token, raising $222 million at a $3 billion fully diluted network value with lead investor A16Z Crypto alongside a range of other outstanding strategic partners. Turning to our stablecoin network and digital assets growth and adoption. We continue to see very strong enterprise and use case expansion. Meta, the world's most preeminent social platform, began using USDC for creator payouts. This is significant because just last year there was a view that big tech companies would introduce their own stablecoins. We've been very clear that the network effects, liquidity and global reach of our network, along with sound regulation, make USDC the preferred option for major enterprises integrating this technology and that it makes little sense for these companies to go it alone. Meta is demonstrating exactly that. We're seeing this across the board. DoorDash paying out USDC to drivers and other global enterprises embracing USDC in their payment flows. Polymarket adopting USDC for funding and settlement on their leading prediction market. Innovative financial institutions like Arbor Bank using USDC to power 24/7 banking and expanded relationships with leading exchanges, including the top exchanges in Korea, a thriving market with significant growth opportunities for USDC. In capital markets, we're continuing to see strong expansion. Circle is participating in a DTCC test run of tokenized securities trading and we're seeing emerging traction with USDC as collateral on regulated derivatives exchanges. In the traditional enterprise space, treasury management applications are really taking hold. We recently announced a broad partnership with Kyriba, one of the leading treasury management platforms, serving thousands of enterprises and many Fortune 100 companies, to make USDC payment flows a seamless part of their solution. Ramp, one of the fastest-growing fintechs in enterprise treasury and payments, is adopting USDC for a wide range of international and domestic use cases, and cross-border and treasury flows are increasingly moving to USDC across leading banks, fintechs and even the start-up ecosystem with Y Combinator driving funding operations in USDC. The use cases are expanding, and this is driving further flywheels. While the stablecoin market itself was relatively flat in the quarter, it grew 32% year-over-year. More importantly, stablecoin transaction volumes continued to grow. According to Visa's reported figures on commercial transaction volume, USDC continued to gain market share and now accounts for 63% of all stablecoin transactions. Looking more broadly at on-chain volume, USDC transaction volume grew over 260% year-over-year to $21.5 trillion in the quarter. Other third-party data sources, which include Solana transaction volume, put USDC's volumes at nearly $30 trillion in the quarter, with our market share at approximately 80% of all on-chain transaction volume. I want to underscore an important point. USDC is the most widely transacted and used dollar digital currency in the world. No dollar digital currency is achieving anywhere near the volume of on-chain transactions as USDC. And as this market accelerates, we believe this leadership position and the network effects that flow from it will continue to compound to Circle. We also remain the most liquid and available digital dollar in the world, having minted and redeemed nearly $150 billion of USDC in Q1 alone, providing reliable and compliant digital dollar dial tone through our global liquidity network all around the world. Alongside USDC's growth, we are seeing strong growth from our other digital assets. EURC, which has long been the world's largest euro stablecoin, grew 2x year-over-year, ending the period at EUR 358 million. Our tokenized money market fund, USYC, grew over 300% year-over-year and as of May 7 stands at over $3 billion in assets. Circle's USYC is now the largest tokenized money market fund in the world and a key building block for collateral and digital asset trading markets. We are also expanding our digital assets portfolio. We recently announced the planned introduction of a new Bitcoin product from Circle, SERBTC, which, pending official launch, would provide a compliant and secure wrapped version of Bitcoin that will be issued by Circle on both the Ethereum and Arc networks. We see a significant opportunity for programmable on-chain primitives for Bitcoin from Circle. As I mentioned in my opening, Arc is getting ready for lift-off with the Arc MainNet launch coming soon. Arc has been designed with a broad group of incredible partners from across the financial system. We have built what we believe will be one of the most institutionally ready networks in the world, a network that will be operated by leading financial institutions with the trust required for global economic infrastructure. We are bringing powerful interoperability infrastructure to the network and we have optimized Arc for asset issuers, payments and capital markets applications. Arc comes with purpose-built features that simplify how stablecoins and tokenized assets bring the financial system and financial services onto these new operating systems. And everything has been designed from day one with AI and Agentic flows in mind, from developer tooling to new services on Arc built entirely for AI agents. Arc is not just our core Layer 1. At launch, Arc will support a suite of assets and protocols from Circle and third parties. We are bringing incremental services to make these accessible and ready and providing a comprehensive set of developer tools, and bundled applications from Circle to deliver meaningful value to Arc users on day one. Our testnet has performed very well. Users are transacting at scale. Arc has a vibrant and growing developer community building on the platform and I believe we and the entire ecosystem are prepared as we approach MainNet launch. I want to focus on one of the most significant components of our strategy with Arc and more broadly for Circle. We are becoming the leading interoperability platform in the entire blockchain ecosystem. As you've seen, we've continued to scale the Cross-Chain Transfer Protocol, reaching almost $50 billion of volume in Q1, representing 3x growth in strategic customer capability with Arc. We've announced that we're opening up CCTP to other asset issuers. We build the highways for USDC, and now we're opening them to other stablecoin and real-world asset issuers. Anyone doing tokenization can get the same interoperability, safe transport and distribution that we've already built around the world across all these blockchain networks. We're also turning on seamless bridges for end users and enabling flows of leading assets from other chains with a new canonical bridge from Circle. This infrastructure with safety, trust and monetization options available to both Circle and third parties that use them is a pillar capability of Arc and Circle's platform more broadly. And this is coming at a very important time as recent hacks put into question the safety and reliability of some competitor networks. Our focus on foundational security was further reinforced with our post-quantum readiness roadmap announcement, including that transaction messages on Arc will be post-quantum secure on day one. On our path to building Arc, we are excited to announce today that Circle has undertaken a presale of the Arc token. Alongside the presale, we have released the Arc token white paper available today on the Arc website. The Arc token will help to bootstrap and scale the network by aligning participants, including Circle, with the long-term success of the network and enabling governance, staking and security and other protocol functions across the network. This is about building a new economic OS with broad-based stakeholders across the global financial and developer ecosystem. That means that every app builder, every end user and every institution building and operating on the network can become a stakeholder and ultimately participate in governance. Our Arc token presale was led by A16Z Crypto and includes some of the world's largest asset managers, including Apollo Funds, Arc Invest, BlackRock, Janus Henderson Investors, exchange, fintech and capital markets firms such as Bullish, Intercontinental Exchange, Marshall Wace and SBI Group and leading global banks such as Standard Chartered Ventures as well as venture firms, including General Catalyst, Hahn Ventures and IDG Capital. As I noted at the outset, Arc is built as an economic OS that anticipates this convergence with AI operating systems, and we are accelerating our product investments in this space, both on top of Arc and by building on the wide range of applications and integrations that already exist for USDC. Today, we are rolling out key parts of the Circle Agent stack. This morning, we launched agent wallets, a new product that allows agents to permissionlessly build on-chain wallets, conduct transactions, on-ramp USDC, and operate within predefined policies and safety guardrails. We also brought Agent Nano payments online, where USDC transactions as small as one hundred-thousandth of a cent enable high-frequency machine-to-machine payments. And all of these features are built supporting interoperability across agents and API services through the X402 standard, which Circle is helping to design. USDC already has an enormous lead in agentic payments today, with 99.8% of all X402-Agentic payments being settled using USDC. We also launched the first version of our agent marketplace, an open hub for users and agents to discover, pay for and invoke agent services that transact in USDC programmatically with over 500 endpoints already available for agents. Finally, we launched the Circle platform CLI, providing a command line interface to the full range of Circle's infrastructure and enabling both developers and AI agents to bootstrap, build, automate and integrate all of Circle's infrastructure into AI applications. Our adoption of AI is not just outward looking. We are undertaking a significant internal transformation and AI adoption inside Circle is accelerating. We are building an AI-driven company, aggressively rolling out AI infrastructure and building agentic workflows to drive productivity and acceleration across the business. With this, our product velocity is increasing dramatically. You may have noticed that we are shipping more technology at greater speed, enabled by AI-assisted development harnesses. We are also reimagining every business function with AI agents proliferating across Circle and beginning to manifest new ways of coordinating, executing and delivering our business. Notably, we have seen rapid uptake of AI coding tools; weekly active users of AI tools building automations at Circle have rapidly grown to approximately 85% of employees. Our teams have already deployed over 600 AI-native apps this year, as we have capitalized on major breakthroughs in agentic and AI development. As a regulated company, we approach this comprehensively, considering the impact on our talent, security posture, financial controls and the governance required to ensure these deployments are conducted safely. We will continue to discuss our AI transformation as it is one of the most exciting things happening as we become an agentic AI-driven company. We are also continuing to see strong progress with our expanded payments products with multiple major new product launches since introducing CPN. The product line is now becoming robust and competitive and CPN has been growing. We ended the quarter with $8.3 billion of annualized total payment volume on a trailing 30-day basis, up 17% quarter-over-quarter. And as of May 7, we are approaching $10 billion of annualized TPV, up nearly 75% since we last reported. We've now enrolled over 136 financial institutions into using CPN products, up 36% quarter-over-quarter. Alongside this growth, we recently introduced CPN managed payments. To put managed payments in context, many banks, financial institutions and payments firms are challenged to get up and running on stablecoin payment networks such as CPN. The biggest hurdles have been licensing, USDC liquidity, account infrastructure for stablecoin custody and blockchain compliance operations, most of which they have not yet built out on their own. With managed payments, we offload that complexity onto Circle where we operate these capabilities as a managed service. We can bring a bank into CPN on an accelerated basis, delivering all of the benefits of Circle's global infrastructure, our compliance, liquidity, network effects and interoperability, while compressing time to market. We see this as a significant opportunity to bring banks, payment firms and financial institutions onto CPN at scale. I will conclude with where I started. Today, Circle is an early-stage company and at the beginning of executing against our long-term strategy. We have built fantastic platforms and businesses and we are fortunate to work with an extraordinary number of leading institutions. Each quarter, we see more of the greatest companies in the world — leading technology companies, financial companies, enterprises and others — adopting our technology to make the financial system work better. We are entering a fundamentally different era, an Internet financial system era in which economic operating systems and intelligence operating systems are colliding: software-powered money, a software-powered economic system. This convergence of AI and economic activity is happening at Internet scale and velocity. We see glimpses of this today: the power of open programmable money on our stablecoin network, which is seeing significant growth in the velocity and quantum of transactions. And we are laying down the next major layers that are necessary for this new Internet paradigm to accelerate and take hold. It's an incredibly exciting time to be building here at Circle, and we are thrilled with the progress we have continued to make this past quarter. With that, let me turn it over to Jeremy Fox-Geen, our CFO, to take you through the financial results.

Jeremy Fox-Geen, Chief Financial Officer

Thank you, Jeremy, and good morning, everyone. We delivered a strong first quarter with USDC becoming the most widely used digital asset on-chain and accelerating product launches, adding breadth and depth to our platform. Our financial results reflect the continued adoption of USDC and our consistent and disciplined execution. I'll start by reviewing the quarter and then turn to guidance. USDC circulation ended the quarter at $77 billion, up 28% year-on-year, although roughly flat sequentially despite the roughly 45% decline in digital asset markets since their peak in October 2025. This reflects the underlying growth in non-crypto utility and use cases. USDC held within Circle's platform infrastructure grew 3.5x year-over-year to $13.7 billion in the first quarter, representing 18% of total circulation. The reserve return rate was 3.5% for the quarter, down 66 basis points year-over-year, reflecting the decline in SOFR during this period. Total revenue and reserve income was $694 million in the quarter, up 20% year-over-year as growth in circulation and other revenue was partially offset by that lower reserve rate during this period. Total distribution, transaction and other costs increased 17% year-over-year to $407 million. Revenue less distribution cost margin was 41.4%, up 1.5 percentage points year-over-year, driven by growth in USDC held on our platform and by the growth in other revenue. Quarter-over-quarter margin increased 1.3 percentage points, driven by growth in other revenue, partially offset by a mix shift as Coinbase represented a larger share of circulation during the quarter. Other revenue was $42 million, up 2x year-over-year. Subscription and services revenue was $34.9 million, primarily from blockchain network partnerships. Transaction revenue was $6.7 million, an expected decline from last quarter, where we had a $7 million benefit from the Canton coin launch. Despite that benefit in Q4, other revenue grew quarter-over-quarter. Total revenue and reserve income less distribution, transaction and other costs grew 24% year-over-year to $287 million. Adjusted operating expenses were $136 million, up 32% year-over-year as we continued to invest in our product, distribution and operating infrastructure to drive long-term growth. Adjusted EBITDA grew 24% year-over-year to $151 million, reflecting our continued disciplined execution as we invest in growth initiatives. Adjusted EBITDA margin for the quarter was 53%. Turning to guidance. We are leaving our full year 2026 guidance unchanged. However, this guidance does not include the future financial impacts of the Arc token presale, Arc incentive programs or any Arc-associated revenue streams. In the future, when Arc tokens are created and delivered, we will recognize the value as other revenue. There will also be impacts to other costs, RLDC and adjusted EBITDA, particularly as we enter into token incentive agreements and open up the surface area for other Arc-related revenues. We believe Arc has the potential to become an important long-term growth factor. While it's too early today to quantify the many impacts from Arc and the Arc token, we plan to provide an updated view of guidance on our next call. And with that, I'll turn it back to Scott to start the Q&A portion of the call.

Scott Blair, Head of Strategic Finance

Thanks, Jeremy. We're excited to kick off Q&A with a couple of questions that we collected from our retail analysts using the Say platform. Our first question comes from Brandon G who wants to know what is Circle doing right now to remain the key leader in the stablecoin market?

Jeremy Allaire, Co-Founder, Chief Executive Officer and Chairman

Thank you. This is Jeremy Allaire. Happy to take the question. Just as we just shared, in Q1, according to third-party data, we saw USDC account for 80% of dollar digital currency transactions on-chain. And that's up considerably year-over-year. And so we are — we feel very good about the growth and the traction and the adoption that's happening there. We obviously are continually focused on this, and I'll highlight a few key things. The first is just making sure that our stablecoin network, USDC, is as widely available as possible around the world, expanding our global reach, expanding the access and liquidity to USDC in markets, including emerging markets all around the world. We have significant initiatives there. Obviously, expanding the partnerships and the use cases and the kinds of firms that are building on USDC. USDC is part of a stable core network that has network effects. And so when the world's largest social platform like Meta begins to use USDC, or major e-commerce companies like DoorDash begin to use it or treasury management systems that are making and receiving payments between enterprises begin using it, that multiplies the network effects of USDC and those growing use cases then spill into more companies that embrace those use cases. So those are major forces, again, helping support and drive that. And then there's new things that we're building. So Arc itself, which we talked a bit about here on the earnings call, is fundamentally a stablecoin-native Layer 1 blockchain infrastructure. It is going to bring, we believe, a wide array of applications in payments, in capital markets and in agentic as well. And so that really leads to another key focus for us. Again, we talked about it with the Circle Agent stack launch today. We believe that the dominant form of transactions in the agentic economy will be conducted on these new economic operating systems and networks and that well-regulated digital cash instruments like USDC will be the preferred form of payment. And in fact, today on these AI agent protocols like X402, USDC represents 99.8% of all the transactions that are happening. And then finally, we're working to make sure that all around the world, governments have clear policies so that these digital dollars can work effectively everywhere. And so it's very holistic. It's go-to-market, it's product, it's innovation, it's policy, it's international, and those are some of the things that we're doing.

Scott Blair, Head of Strategic Finance

Our second question comes from Tyrel and he's asking what percentage of USDC usage today is tied to real economic activity versus trading and arbitrage? And how is Circle actively shifting that mix towards durable non-speculative demand?

Jeremy Allaire, Co-Founder, Chief Executive Officer and Chairman

I'll happily take that as well. So there's more and more great third-party data that looks at all of the different types of activity that are happening. And so we see it within our own activity and customer base, and we also look at that third-party data. So for example, in our call, we talked about Visa's new analytics that they've been reporting on for some time, which looks at commercial transactional activity and growth. And there, for example, in that analysis, we saw multi-hundred percent growth year-over-year. We saw that USDC is approximately 60% of the traffic in commercial, real commercial transactions that are happening. But then again, in our own data, what we see is the types of companies that are building on our infrastructure and that are proliferating around the world, many of these are financial institutions building products to deliver digital dollars to users around the world. CPN itself, for example, which since we last reported, we've seen the annualized total payment volume on a trailing 30-day basis grow 75% since our last reporting period. That's fundamentally all driven by B2B cross-border flows that are using stablecoin payment network infrastructure like CPN to accomplish this. And then, of course, in the use cases that we're talking about here today, whether it be Meta or banks offering 24/7 rails with USDC, treasury management companies like Kyriba that work with many of the Fortune 100 and thousands of companies — all these are driving those new use cases. And obviously, centrally having something like the CLARITY Act is crucial because this now becomes part of the legal global financial system. And so that gives corporations of all sorts and financial institutions of all sorts confidence to build and use this technology.

Scott Blair, Head of Strategic Finance

Thanks, Jeremy. Before I turn it over to the operator, I want to thank Brandon, Tyrel and everyone else who participated in providing questions on the same platform for our earnings Q&A. With that, operator, please begin the rest of the call.

Operator, Operator

Your first question comes from the line of James Yaro from Goldman Sachs.

Analyst (Goldman Sachs), Analyst (Goldman Sachs)

This is an analyst on behalf of James. My first question was around could you update us on the drivers of the robust RLDC margin in the quarter? And whether this level could be sustained potentially? It was well above your RLDC target range.

Jeremy Fox-Geen, Chief Financial Officer

Yes, thank you for the question. It's Jeremy Fox-Geen, I'll take this. We don't break down specifically the drivers and the component pieces of RLDC margin other than the information we provide in our earnings materials, which shows the composition of that with net reserve margin and other income. And so you can see those pieces there. We had strong growth in other income, which provides a boost to the RLDC margin. Now speaking more broadly about the net reserve margin piece. As we've said before, there are many puts and takes as to how this evolves over time. What we saw this quarter, and you see it in the materials, was growth in on-platform at Coinbase, particularly in the last month of the quarter. And we also saw some modest pullback in certain other highly incentivized channels. And that gave us, we think, a very strong RLDC margin for the quarter.

Analyst (Goldman Sachs), Analyst (Goldman Sachs)

That was super helpful. Just one follow-up over here. I wanted to touch on Circle Agent stack and an update on stablecoin use cases for agentic commerce. How much adoption has there been so far? And what do you look to achieve over here?

Jeremy Allaire, Co-Founder, Chief Executive Officer and Chairman

Yes. I'll happily take that. The Circle Agent stack launch is a significant launch for us. It makes available all of the power of USDC and of Circle's infrastructure to agents, whether they're agents that developers are building or autonomous agents that already exist, to be able to store value, transact, and do that safely. What we have seen are a couple of things. So first, obviously, there are agent payment protocols like X402, which are seeing very nice growth from a really early starting point. The explosion in agentic technology has really happened just in the past several months. But every single conversation we're in with enterprises, with financial institutions, with key partners — every single one of those is focused on their applied AI strategy and how they intend to apply agentic. And so if you're a platform company like Circle and you are looking at where the world is going, it is very clear that AI-driven and agentic-driven infrastructure and automation is going to be very central to that. And so we've made this a huge priority in terms of the product stack. I would say, additionally, what's interesting is you do see in the transaction volume growth in stablecoins and notably USDC, which has seen, as noted according to third parties, as much as 80% of on-chain transactions and digital dollars happening in USDC. There's sort of what happens with agents on the actual agent payment protocols like X402, and then there's agents that are just being deployed and executing in markets in other places. So we do actually believe that some meaningful portion of activity is AI-driven already, and we've seen that kind of sharply increasing in Q1 as these agentic technologies have increased. But this gets to the core of how I opened the call, which is our core thesis: that the convergence of AI operating platforms that are scaling and these economic operating platforms on these blockchain compute networks are converging and are very synergistic, and that the agentic economy, which we think is going to power more and more of labor, work, output and exchange, is where the entire economic system is headed. So we're positioning ourselves not just with USDC, but across Arc, the agent stack and other things that we're doing.

Operator, Operator

Your next question comes from the line of Kenneth Worthington from JPMorgan Securities.

Kenneth Worthington, Analyst (JPMorgan Securities)

In terms of regulation, how do we think about a world for USDC where revenue for Circle continues to be earned on assets but rewards are paid to end customers more based on transactions? How and where does this impact Circle's promotion strategy for USDC, if at all? And does legislation seek more transaction-based revenue streams?

Jeremy Allaire, Co-Founder, Chief Executive Officer and Chairman

Great question, Ken. I'm going to take the first part of that, and then I'm going to have Heath Tarbert, Circle's President, jump in on the second part of that. I think what's notable is — and you've heard us talk about this in the past — we are very focused on driving the utility value of this new form of money. And as we emphasized on the call, we're seeing this continued diversification of the range and types of companies and use cases that are growing this and driving this. And what's notable about legislation in this space is that the legislation very specifically is saying, hey, look, if you're a distributor of stablecoins and Circle under the legislation, which Heath will talk more about, Circle can continue to enter into great economic relationships with platforms, not just in the U.S. but all around the world. But those platforms are going to — if they want to incentivize users with stablecoins, it has to be based on real-world utility. It has to be based on real transactions, real payments volume, real activities, and that's exactly the kind of incentivization that we want to see because it aligns stablecoin rewards with the growth of the utility of our network and because this is a network effect driven business, that alignment actually, we think, can provide a really powerful tailwind to further adoption of USDC. But to comment specifically on what's happening with the CLARITY Act, and what the currently published text looks like, I'll have Heath Tarbert jump in as well to share his perspective.

Heath Tarbert, President

Thank you so much, Ken, for that great question. Maybe just take a step back on CLARITY more generally. I mean, CLARITY, we're not waiting for Congress to act to make history as a company. But obviously, if Congress does act, the legislation will be helpful to us for a variety of reasons. Number one, obviously, we announced today the token presale. We've been working on the blockchain. All of those things are addressed in the CLARITY Act. So it's incredibly helpful for us as a full-stack Internet platform company for our businesses apart from stablecoins. Secondly, which is really important, is it allows and provides the legal certainty for all sorts of traditional financial institutions and firms to start dealing in and using digital assets at scale. And so when you think about tokenization of securities, well, again, obviously, they're going to use potentially USDC as the cash leg of all of those transactions. And then the part that you specifically mentioned, Ken, that's in Title IV of the Act. And Title IV of the Act is really important because it actually specifically addresses stablecoin use cases by banks, by broker-dealers by custodians and gives them the permissibility that they need to be able to engage in these activities. And of course, the very last provision there, which I think you're going to see is Section 404 is the so-called compromise. But as Jeremy said, we don't view it as a compromise at all. It's actually the right answer. And for Circle, we believe it's far superior to the status quo. We obviously built USYC, which is the world's largest tokenized money market fund for passive yield on digital assets. But USDC is different, right? Its value is in its velocity and its utility, not in its idleness. So as Jeremy mentioned, we're actually laser-focused on incentivizing its use because that flywheel is going to drive growth. But quite frankly, no deposit substitute model can even match. And so the current version, I think when it gets out there, we're likely to see Congress specifically referring to stablecoin use cases for rewards that are things like payments, conversions, remittances, market-making activity, posting of collateral and then things that are native to Web3, like staking and validation. So if you think about that, those are the very things that Circle wants to incentivize and it may very well be that Congress is going to help us do exactly that.

Kenneth Worthington, Analyst (JPMorgan Securities)

Great. Just a simple follow-up. How do we think about G&A from here? It was $57 million. Is that sort of a good jumping off point as we think about the rest of the year?

Jeremy Fox-Geen, Chief Financial Officer

Yes. As we think about the rest of the year, I'd just refer you to the overall OpEx guidance that we've given, right, that has all the pieces within it. We continue to invest at this incredible opportunity in growing our distribution, our product set and our capabilities. But as I say, you can see our guidance there.

Operator, Operator

Your next question comes from the line of Peter Christiansen from Citi.

Peter Christiansen, Analyst (Citi)

Impressive pace of execution here. Jeremy Allaire, the Arc White Paper frames Arc as a native coordination and security asset for the network. But I guess, over time, how should investors think about the balance between value of activity accruing to Arc itself versus Circle? And how do you avoid any economic tension between the two?

Jeremy Allaire, Co-Founder, Chief Executive Officer and Chairman

Thanks, Pete. Happy to talk about that. So I think the first is just understanding these new blockchain network computers, these new types of economic operating systems, draw on stakeholder engagement models that we've seen in the blockchain space with other blockchain network tokens. They build on stakeholder engagement models of financial network consortiums because Arc is obviously a permissioned infrastructure of financial infrastructure companies and open source more generally. I think the key is Arc and the Arc token are designed specifically to drive value for all of the stakeholders across the Arc ecosystem. And as I mentioned in my opening comments, yes, Circle is the genesis of this. We've built this technology. We are ushering it into the world. And as noted in the Arc token white paper, Circle retains 25% of the Arc tokens, and that's significant. That is the sort of huge amount of value that Circle has created and is bringing into this. But in order for a distributed network like this to thrive and in order for it to become a global scale OS that the economy is running on, we need major companies. We need major stakeholders. We need the developers that are building the applications on top of this, the end users that are driving the volumes of activity on this. All of the stakeholders can be incentivized economically and fundamentally to get utility out of this digital token. And again, the CLARITY Act codifies a framework for companies to be able to use digital tokens to build incentive systems and incentive alignment for product services, applications and other things. So it is designed to do that, and it is ultimately something where as an open network, we need participation in governance as well. The Arc token provides that mechanism for governance. You can think about Circle as a founding creator and stakeholder, and we will get, as Jeremy alluded to in his comments about guidance, significant impacts for us on revenue and our margin structure and EBITDA, and we'll talk more about that on our next earnings call. But there is a very direct benefit here for Circle. We think this is a hugely valuable platform for Circle. And then secondly, the whole purpose of this is to create an infrastructure where stablecoin-native finance — not just payments but capital markets and all other financial applications — depend on stablecoins. And so the successful adoption of Arc network, including through the benefit of the Arc token, has a huge flywheel effect onto our stablecoin network and our digital assets and into CPN and other parts of the Circle business where we derive significant revenue and have emerging revenue streams as well.

Jeremy Fox-Geen, Chief Financial Officer

And I'll just add one thing on to that, which, as Jeremy said at the end, this is all additive for Circle. You talked about a tension. We don't see it as a tension. We see this as an incredible value growth opportunity, right? Arc is a flywheel business, which powers our USDC, digital and other digital assets business, which themselves power CPN, and Circle's shareholders retain value in that, not only through the growth in those businesses, but also through Circle's participation in Arc token.

Kenneth Worthington, Analyst (JPMorgan Securities)

That's super helpful. And Jeremy, to your point about attracting developers, building on these applications across the full stack: you're increasingly hearing about a number of players building point solutions at different points of the stack, but Circle having the full array here seems like a significant competitive advantage. Could you elaborate on having full stack versus point solution and how that makes Circle more competitive for the rollout here?

Jeremy Allaire, Co-Founder, Chief Executive Officer and Chairman

I can happily comment on that. I think whether you're a financial institution or an enterprise or a start-up and you're looking at this, the full stack makes a huge difference. Having a foundational core operating infrastructure that is simple to adopt, stablecoin-native with very high performance is key. We're layering on top of that the most widely adopted interoperability technology with CCTP, which we're opening up to other asset issuers as well. That means that if you're building applications, they can work — the value exchange can work seamlessly across other apps on other networks. The developer tooling, our wallets tooling and now with our agentic stack, developers can accelerate time to solution incredibly fast. If any of you who are listening use Claude or Claude Code or other tools, I highly encourage you to go to agents.circle.com to see for yourself how powerful this is. We're building the developer platforms, the operating platforms, the higher-level services, infrastructure and protocols and bringing the world's leading digital assets in dollars, euros and money markets. With the new Bitcoin assets or SERBTC, we think we'll have the opportunity to build one of the leading programmable Bitcoin assets as well. So that whole capability, we think, is significant and certainly highly differentiated for developers who are trying to think about building in the space.

Operator, Operator

Your next question comes from the line of Owen Lo from Clear Street.

Owen Lo, Analyst (Clear Street)

Going back to Arc, could you please give us an example when Arc token is created, how it will impact revenue in other revenue line items? For example, when $100 million of Arc token is created, how much revenue would you book in other revenue? How does the financial work?

Jeremy Fox-Geen, Chief Financial Officer

Yes. Owen, thank you for the question. I'll take that. I'll just give a very brief overview of the impact of the future Arc token on the financial statements and then specifically to the piece you just talked about: when Arc token is created. The Arc tokens will be held on Circle's balance sheet at cost, which is zero. When we then complete the obligations under the token presale we will then recognize the value of those tokens as other revenue. And that value will then flow down through RLDC and adjusted EBITDA.

Owen Lo, Analyst (Clear Street)

Got it. And then could you please remind us the benefits of using Arc Layer 1 over other Layer 1 networks? Some networks are mainly used for payments. Some networks are used for lending. Is Arc mainly for payments or capital market transaction settlement rails or tokenization rails? More color would be helpful.

Jeremy Allaire, Co-Founder, Chief Executive Officer and Chairman

Sure. Arc is designed as a general-purpose horizontal economic operating system. We believe that economic activity, in many forms — whether that be payment activity, financial services products, capital markets activity, or agentic activity — will run on these economic operating systems. And increasingly, these economic operating systems and the apps that run on them will be powered by software machines that are generally AI agents. So we think that's the paradigm of the future. When you look at some of the firms participating in the Arc token presale — world-leading asset issuers on the asset management side and private credit, traditional ETFs — you see global systemically important banks investing in this who are looking at this for payments and capital markets and FX. What we have seen through the design partners that we've worked with — and we've talked about the hundreds of design partners involved — it really spans a number of areas. One is we expect Arc will be the very best infrastructure in the world for USDC liquidity, interoperability and payments. So straightaway, this will be the best settlement infrastructure in the world for stablecoins, not just USDC but other stablecoins. Second, a number of the features we've built with Arc are very specifically designed for regulated banks and capital markets participants, providing assurances they need at an operational, compliance and security level to operate. So we expect to see banks moving things like tokenized repo or applications like intraday FX running on these networks. We have designed Arc with asset issuers as a central use case. If you're an asset issuer — whether that's tokenized stock, tokenized funds, other tokenized currencies — issuing on Arc will give you the benefits of performance, security and privacy features, and it also gives you liquidity against USDC and distribution through our interoperability infrastructure. You could tokenize a fund and have that tokenized fund not just be distributed on Arc but, through CCTP, made available for use across other networks like Canton, Ethereum, Base, Solana or others. So it's a liquidity and distribution hub for asset issuers. It's a full-spectrum platform and it's designed to be widely adopted across the ecosystem from day one.

Operator, Operator

Your next question comes from the line of John Todaro.

John Todaro, Analyst

Congrats on the product rollout. I guess going back to Arc: we've seen other token presales and subsequent sales where valuations step up materially each time. Do we expect other token sales to be more broadly distributed? And if Circle has $750 million in tokens reserved, I guess if fully diluted valuation ratchets up, that can be quite a bit. So trying to understand the plans for the rollout broadly and what that looks like.

Jeremy Allaire, Co-Founder, Chief Executive Officer and Chairman

Yes. All I can say here is we have conducted this Arc token presale with the $3 billion fully diluted valuation and the $222 million raise. We have obligations to ultimately distribute tokens to those presale participants. Our core focus is really getting Arc MainNet launched, which is coming soon, driving the utility and growth on the network. Ultimately, the Arc token plays a very important role in utility, governance, staking and security as the network scales out. In the Arc token white paper, there is 60% of the tokens designed for ecosystem grants, airdrops and other incentive programs that Circle and the broader community over time would be interested in deploying. So there are future opportunities for how Arc token is deployed, especially out of that 60% of the Arc token genesis, and there will be multiple paths for distribution over time tied to network growth and incentives.

John Todaro, Analyst

Understood. Okay. So it sounds like there's a wide array of how those tokens can ultimately be distributed. I have a follow-up. You mentioned earlier on the call a new Bitcoin asset product and referenced the AVE-related incident. In your view, has confidence in the DeFi ecosystem been shaken and how might these product rollouts ultimately address some of the concerns raised by such incidents?

Jeremy Allaire, Co-Founder, Chief Executive Officer and Chairman

Yes. A couple of things to set the record straight. There was not an attack on Aave itself. There was a breach of an interoperability infrastructure company whose core systems were hacked, and then that was exploited through other DeFi protocols. The protocols themselves were then utilized by bad actors, but the protocols themselves didn't break per se. Aave itself remains a significant and important on-chain lending protocol and platform. As we publicly disclosed, Circle made a purchase of Aave tokens itself as part of our continued support for that ecosystem. What I would say though is that the models for on-chain borrowing, lending and other financial market primitives will continue to grow. With Arc, we are working with key players in the ecosystem to build institutionally ready on-chain protocols — protocols that have institutional participants, institutional curation of vaults and, in some cases, institutional permissioning. Executing code and smart contracts on blockchain operating systems is part of the future. I think a key lesson here is that the industry hasn't had a lot of explicit regulation and we will see a leveling up in controls and security. Companies like Circle adopt governance and control structures as a regulated company, and we think those kinds of control structures are important for on-chain protocols, applications and services as well. We'll continue to see improvements in security, insurance, oversight and custody which will lift confidence over time.

Operator, Operator

Your next question comes from the line of Joseph Vafi from Canaccord Genuity.

Joseph Vafi, Analyst (Canaccord Genuity)

Just terrific progress here, exciting set up on a lot of fronts moving forward. Maybe on the layer 1 competitive landscape: there are a couple of other big L1s being stood up for real-world applications. I'm wondering how you compare and contrast — are you competitors against some of these other L1s or working together to bring more volumes on-chain?

Jeremy Allaire, Co-Founder, Chief Executive Officer and Chairman

Sure. A couple of key things. First, our stablecoin network, which includes our digital assets like USDC and USYC, is market neutral and platform neutral. USDC now operates on 34 different blockchain networks. CCTP is connected to many of these networks. Providing the most liquid, reliable, well-regulated digital dollar to every important platform in the world is a priority for us. Ensuring interoperability is a huge priority. So we participate on many networks, including Canton, and provide CCTP connectivity into them. At the same time, we're moving from an era with many experimental blockchain platforms toward an inflection point where new platforms designed for mainstream scale adoption will emerge. We think Arc has the potential to be one of those platforms. We've attracted leading institutions as design partners and presale participants. We expect to compete and win in that space but also emphasize interoperability as a central theme. If companies issue on Arc, they can leverage CCTP to bring their assets to Canton, Ethereum, Base, Solana and other networks. Cross-platform reach and interoperability is top of mind for firms building in this space.

Joseph Vafi, Analyst (Canaccord Genuity)

Sure. That's great color. And then on the Kyriba and other treasury management strategy, that seems like a great distribution channel into the corporate market for USDC. Do you think Treasury Management distribution will be the key driver here or is there something else we should be looking at in terms of corporate USDC balance sheet adoption?

Jeremy Fox-Geen, Chief Financial Officer

It's a great question. Look, as a corporate CFO, and I talk to a lot of CFOs out there, we all know the benefits of stablecoins and stablecoin rails, and we're all looking forward to a world when we can easily use these and when they're integrated into our existing systems and control infrastructure. Landmark treasury management service providers and systems providers like Kyriba integrating USDC is both a necessary step to that mainstream adoption and also a really exciting one, given Kyriba is a leader in this space. We expect many of them to integrate USDC over time, and that will be an important distribution channel among others.

Operator, Operator

Your next question comes from the line of Dan Dolev from Mizuho.

Dan Dolev, Analyst (Mizuho)

I have a quick question and a quick follow-up. I noticed your comments on the modest pullback in certain highly incentivized channels, which helped with the RLDC margin. Can you maybe — is this Binance and is this positive or neutral? Then a quick follow-up.

Jeremy Allaire, Co-Founder, Chief Executive Officer and Chairman

Without commenting on which channels specifically — and as we've said before, we have many, many partners — I don't think we see it as a positive or a negative. In any one quarter, there are puts and takes, and we've said that consistently, and we've seen that in our numbers since we've been public. So we're happy with where we are for our guidance for the full year.

Dan Dolev, Analyst (Mizuho)

Makes a lot of sense. My quick follow-up: it looks like the USDC on-platform growth was stellar this quarter. Maybe just a comment on what's driving that and how we should think about that because it's obviously a big positive.

Jeremy Allaire, Co-Founder, Chief Executive Officer and Chairman

Sure. We continue to partner with more and more firms that are building on our infrastructure and taking advantage of our wallets and custody technology and our developer tools. As we keep building more partnerships, we have the opportunity to grow on-platform balances. As a market-neutral infrastructure company and with products like the Circle Agent Stack that build on our wallet stack and our Circle Gateway product, agentic activity and developers building AI automated applications on our infrastructure can drive on-platform growth as well. We continue to invest in the best infrastructure possible so people building on Circle get the benefits of that, and that grows our footprint in the ecosystem as a whole.

Operator, Operator

Your next question comes from the line of Jeff Cantwell from Seaport Research.

Jeff Cantwell, Analyst (Seaport Research)

I wanted to follow up on USDC circulation. You said it was flat sequentially and ended the quarter at $77 billion. Maybe just talk more about what you saw during the quarter because the on-chain data had the high, I think it was above $79 billion, but that seems to have tempered. Was that because of broader macro concerns or was there anything else to call out that you're seeing in the quarter?

Jeremy Allaire, Co-Founder, Chief Executive Officer and Chairman

I'm happy to take that. First, as we've talked about, there's a reason we don't guide specifically on what circulation is in a quarter or year. We look at ongoing CAGRs and growth trends. We have seen lots of ebbs and flows historically: spikes, sideways periods, and other activity. There are always macro considerations that affect the price and velocity of money and market psychology. Then you also have endogenous activity in the digital asset ecosystem. We saw digital asset markets — transaction volumes on big exchanges — decline significantly and prices were down, but stablecoins held up. It's remarkable that the stablecoin market grew 32% year-over-year and Circle around 28–30% as well. In the period, there was deleveraging in Q4 related to some security incidents and losses, which causes deleveraging. As a company, we've seen this over time. We look at fundamentals: more applications being built, more transaction volume, more institutions coming on board, regulatory clarity providing tailwinds, and improving technology. All of those are very strong right now, which is why we continue to be optimistic. Over the coming years, this could grow to trillions of dollars of regulated digital dollars in circulation around the world, and that's the world we're building for.

Jeremy Fox-Geen, Chief Financial Officer

Small point on that: while we're very optimistic about the future, even though quarter-on-quarter circulation was flattish, note that USDC is taking share in actual on-chain transaction usage across various data providers, so much so that USDC took a majority of utility share this quarter. That's an important trend as we look to mainstream adoption.

Jeff Cantwell, Analyst (Seaport Research)

That's very helpful. Then I wanted to follow up on the Arc token and other revenue: beyond the zero cost accounting treatment you mentioned, would there be drivers that generate other revenue, such as transaction revenue or spread on trading of tokens? Could you help conceptualize the components of other revenue related to Arc?

Jeremy Allaire, Co-Founder, Chief Executive Officer and Chairman

Got it. There are several different potential impacts from the future Arc token on other revenue. The first is the presale: if Circle sells tokens as in the presale, the value of that will drop through to other revenue. Secondly, Arc token opens up a surface area for network incentive schemes that we've seen across many Layer 1 blockchains. If Circle grants tokens in an incentive program, typically with some performance condition, the value of that grant will be recognized in other revenue, and a corresponding other cost will be recognized when tokens are given away in an incentive grant. Finally, Arc opens up other potential revenue streams such as running a validator on the Arc network or providing protocol services, which can provide direct other revenue streams for Circle. Those are some of the main categories, and we'll provide more detail when the time is right.

Operator, Operator

That's all the time we have for our Q&A session. I will now turn the call back to Scott Blair for closing remarks.

Scott Blair, Head of Strategic Finance

Thanks, operator. For those we couldn't get to on the call, we'll happily find time to follow up. Again, we'd like to thank you for your attention and participation this morning and look forward to connecting soon.

Operator, Operator

This concludes today's call. Thank you for attending. You may now disconnect.