Circle Moved $13.9T in USDC, Yet Reserve Income Shrank

• Token sales for Circle’s Arc blockchain supplied a large share of quarterly revenue.
• Interest income from USDC reserves fell as yields declined.
• USDC changed hands far more often while its supply stayed roughly flat.
• Circle is wiring USDC into card networks and bank payment systems.

Roughly a fifth of the money Circle booked in the third quarter of 2026 came from selling tokens for its own blockchain, a revenue source that did not exist a year ago. The USDC issuer reported $864.9 million in total revenue and reserve income, up 17% year over year, and net income of $226 million, according to its third-quarter results. About $182 million came from ARC token sales tied to Arc, the network Circle took to mainnet on September 16, while interest on the reserves backing USDC fell 8% to $657.6 million.

Reserve income still makes up about three quarters of Circle’s revenue, so its decline tells investors more about the business than the 17% headline growth does, especially when a token distribution that may not repeat at the same scale filled most of the gap.

Earnings of $0.84 per share came in well above the roughly $0.37 analysts expected, and Circle shares rose about 3% before the opening bell, then turned lower once regular trading began. Jeremy Allaire, Circle’s co-founder, CEO and chairman, said the quarter showed “continued proof that institutions are building and expanding on USDC.”

Source: Circle Q3 2026 results

ARC Sales Made Up 21% of Revenue

The token revenue also accounted for roughly 88% of the $207.3 million Circle reported as other revenue, a line that jumped 627% from a year earlier, and the company disclosed minting 10 billion ARC tokens. The money traces back to the private presale Circle closed in May, when it raised $222 million from backers including a16z crypto, BlackRock and Standard Chartered at a $3 billion valuation, which ties this quarter’s revenue to a sale agreed months before Arc went live. Those proceeds come from distributing the token, which makes them different from the fees users pay to send transactions on Arc. Operating income rose 157% to $208.3 million against a 16% rise in operating expenses, and adjusted EBITDA, a profit measure that strips out interest, taxes, depreciation and stock-based pay, climbed 85% to $317 million, while net income rose just 5% to $226 million.

Lower Yields Cost Roughly $57 Million

Circle keeps the dollars behind each USDC in cash and short-dated government securities, so its largest income source moves with interest rates. The reserve return rate fell to 3.5%, which is 0.61 percentage points below a year earlier, and an 8% rise in average circulation could not offset the lower yield, leaving reserve income roughly $57 million below last year’s level.

A large part of that income goes to distribution partners, the exchanges and platforms that hold and promote USDC, and those costs fell 8% to about $412 million. Revenue less distribution costs, the amount Circle keeps after paying partners, rose 55% to $453.3 million, a margin of roughly 52% that owes much to the ARC presale.

$13.9 Trillion Moved on a Flat Supply

On-chain USDC volume grew 49% to $13.9 trillion, about six times the growth rate of average circulation, while quarter-end circulation of $73.9 billion was flat year over year. Circle’s USDC transparency data showed roughly $70 billion outstanding on October 29, though that reading covers a different period and does not show a quarterly decline. Volume counts exchange flows, DeFi activity, automated transfers and the same tokens moving repeatedly, so it overstates commercial payments by a wide margin.

Minting and redemptions each reached $104 billion, with redemptions growing faster, a sign of heavy two-way traffic between bank dollars and USDC without net supply growth. USDC’s share of the dollar stablecoin market, as Circle defines it, slipped 1.83 percentage points to 27% as rivals expanded faster, although wallets holding more than $10 of USDC rose 16% to 7.3 million.

Source: Circle Q3 2026 results

Tazapay Deal Anchors the Payments Push

Circle Payments Network, which moves stablecoin payments between financial institutions, reached an annualized volume of about $41.3 billion, and it should be kept separate from the on-chain total. Visa Direct moved USDC prefunding into commercial use through Inyo Global, letting eligible clients fund cross-border payouts in more than 180 countries without parking cash in dozens of local bank accounts. Samsung Wallet users in the US can send USDC to bank accounts in more than 60 countries, ACI Worldwide is bringing USDC settlement into Latin American payment systems, and Binance invested $100 million in Circle equity.

The roughly $400 million purchase of Singapore-based Tazapay, agreed in September and expected to close in 2027 pending regulatory approval, adds more than $25 billion in annualized payment volume, about 60% of it already in stablecoins.

Guidance Puts Full-Year Margin Below 52%

Circle expects full-year other revenue of $310-330 million, ARC presale included, and a revenue-less-distribution-costs margin of 41.7% to 43.7%, which suggests management does not treat the third-quarter margin as a run rate. The multi-year target of 40% annual USDC circulation growth remains a long-run goal, far above the 8% just reported. Arc is due to move to proof-of-stake in 2027, a model where validators lock up ARC as collateral to secure the network, and Circle counted more than 1,200 projects built during the private mainnet phase, although Circle has not said how many of those projects are running commercially.

Circle also cut about 5% of its workforce in the quarter and booked around $9.1 million in severance and notice payments, trimming staff in the same period it reported higher profit.