Circle sent 63% of Q4 USDC reserve revenue to distributors, compressing margins.
Circle Internet Financial released its fourth-quarter results showing the stablecoin issuer paid $460.6 million in distribution and transaction fees versus $733.4 million in reserve revenue, representing approximately 63% of the gross yield generated by customer deposits.
Circulation of the company’s USDC stablecoins reached $75.3 billion at the end of the year, up 72% year-over-year, according to the earnings report. Reserve revenue increased 69%, while adjusted EBITDA increased five-fold compared to the same period last year.
Total revenue and reserve income reached $770.2 million for the quarter, with distribution costs accounting for nearly 60% of profits, according to the financial statements. Circle retained $272.8 million in net reserve income after distributions.
The company reports “Revenue minus distribution costs” each quarter as its core performance measure. Circle’s net reserve margin stood at 37% in the fourth quarter, meaning the issuer retained approximately $0.37 for every dollar of gross reserve yield.
Stablecoin issuers generate revenue by holding user deposits in reserve wallets composed primarily of short-term Treasury securities and similar instruments. Circle reported a fourth-quarter reserve yield rate of 3.8%, down 68 basis points year over year. The average USDC in circulation doubled from $38.1 billion to $76.2 billion during the period.
Distribution costs increased 52% year-over-year, according to the earnings report. Circle attributed the increase to “increased distribution payments” to exchanges, wallets and fintech platforms that provide access to users. The prior year period included a previously disclosed one-time fee of $60 million paid to a distribution partner.
Circle’s five-quarter trend data shows that distributors consistently claimed about 63% of reserve revenue each quarter. Distribution payments are tied to placement agreements and deal flows rather than fixed technology costs.
The company’s risk disclosures indicate that it may be “unable to maintain existing relationships with similar financial institutions and companies or establish new relationships.” Circle flags potential pressure to accept “less favorable financial terms” with its distribution partners and highlights “dependence on a few key distributors” as a structural constraint.
Circle tracks a metric called “USDC on Platform,” measuring the share of total USDC held on partner platforms. That figure reached $12.5 billion by the end of the year, up 459% year-over-year, with a weighted daily average of 17.8% of total circulation, according to company data.
Treasury yields remained in the mid-3% range at the end of February 2026. Market expectations are for possible rate cuts from the Federal Reserve in the coming quarters, according to financial market data. A falling rate environment would squeeze reserve revenues while distribution costs may prove less flexible, potentially putting pressure on issuer margins.
Circle’s guidance reflects margin compression from the fourth quarter’s 40% RLDC margin, according to the company’s forward-looking statements. Forecasts indicate that distribution costs may not decline in proportion to reserve revenues in a lower rate environment.
In most stablecoin implementations, users do not directly receive a return on their holdings. Issuers earn reserve revenue and negotiate distribution agreements with platforms that control user access. Distributors do not bear the balance sheet risk linked to reserves.
The GENIUS Act, referenced in Circle’s regulatory disclosures, establishes a U.S. framework for payment stablecoins. The legislation formalizes regulatory requirements for stablecoin issuers.
Circle’s operational risk information focuses on distributor relationships rather than traditional liquidity issues. The company states that major partners could change incentive structures, promote competing stablecoins, or develop proprietary infrastructure. Such changes could re-affect transaction flows and distribution economics.
Circle’s reserves are liquid, audited and conservatively managed, according to information provided by the company. The balance sheet is structured to resist repurchase surges.
The company’s “USDC on Platform” metric monitors the concentration of balances between distribution partners. A higher concentration on specific platforms affects the bargaining power of distribution agreements.
Market dynamics in the stablecoin sector are increasingly focused on securing and maintaining distribution relationships with platforms that control user access. Issuers compete for placement on exchanges, wallets and payment rails that determine transaction flows.
Circle’s fourth-quarter results showed the company generated $733.4 million in reserve revenue and allocated $460.6 million to distribution and transaction costs, leaving $272.8 million in net reserve revenue before operating expenses.
Circle Internet Financial released its fourth-quarter results showing the stablecoin issuer paid $460.6 million in distribution and transaction fees versus $733.4 million in reserve revenue, representing approximately 63% of the gross yield generated by customer deposits.
Circulation of the company’s USDC stablecoins reached $75.3 billion at the end of the year, up 72% year-over-year, according to the earnings report. Reserve revenue increased 69%, while adjusted EBITDA increased five-fold compared to the same period last year.
Total revenue and reserve income reached $770.2 million for the quarter, with distribution costs accounting for nearly 60% of profits, according to the financial statements. Circle retained $272.8 million in net reserve income after distributions.
The company reports “Revenue minus distribution costs” each quarter as its core performance measure. Circle’s net reserve margin stood at 37% in the fourth quarter, meaning the issuer retained approximately $0.37 for every dollar of gross reserve yield.
Stablecoin issuers generate revenue by holding user deposits in reserve wallets composed primarily of short-term Treasury securities and similar instruments. Circle reported a fourth-quarter reserve yield rate of 3.8%, down 68 basis points year over year. The average USDC in circulation doubled from $38.1 billion to $76.2 billion during the period.
Distribution costs increased 52% year-over-year, according to the earnings report. Circle attributed the increase to “increased distribution payments” to exchanges, wallets and fintech platforms that provide access to users. The prior year period included a previously disclosed one-time fee of $60 million paid to a distribution partner.
Circle’s five-quarter trend data shows that distributors consistently claimed about 63% of reserve revenue each quarter. Distribution payments are tied to placement agreements and deal flows rather than fixed technology costs.
The company’s risk disclosures indicate that it may be “unable to maintain existing relationships with similar financial institutions and companies or establish new relationships.” Circle flags potential pressure to accept “less favorable financial terms” with its distribution partners and highlights “dependence on a few key distributors” as a structural constraint.
Circle tracks a metric called “USDC on Platform,” measuring the share of total USDC held on partner platforms. That figure reached $12.5 billion by the end of the year, up 459% year-over-year, with a weighted daily average of 17.8% of total circulation, according to company data.
Treasury yields remained in the mid-3% range at the end of February 2026. Market expectations are for possible rate cuts from the Federal Reserve in the coming quarters, according to financial market data. A falling rate environment would squeeze reserve revenues while distribution costs may prove less flexible, potentially putting pressure on issuer margins.
Circle’s guidance reflects margin compression from the fourth quarter’s 40% RLDC margin, according to the company’s forward-looking statements. Forecasts indicate that distribution costs may not decline in proportion to reserve revenues in a lower rate environment.
In most stablecoin implementations, users do not directly receive a return on their holdings. Issuers earn reserve revenue and negotiate distribution agreements with platforms that control user access. Distributors do not bear the balance sheet risk linked to reserves.
The GENIUS Act, referenced in Circle’s regulatory disclosures, establishes a U.S. framework for payment stablecoins. The legislation formalizes regulatory requirements for stablecoin issuers.
Circle’s operational risk information focuses on distributor relationships rather than traditional liquidity issues. The company states that major partners could change incentive structures, promote competing stablecoins, or develop proprietary infrastructure. Such changes could re-affect transaction flows and distribution economics.
Circle’s reserves are liquid, audited and conservatively managed, according to information provided by the company. The balance sheet is structured to resist surges in buybacks.
The company’s “USDC on Platform” metric monitors the concentration of balances between distribution partners. A higher concentration on specific platforms affects the bargaining power of distribution agreements.
Market dynamics in the stablecoin sector are increasingly focused on securing and maintaining distribution relationships with platforms that control user access. Issuers compete for placement on exchanges, wallets and payment rails that determine transaction flows.
Circle’s fourth-quarter results showed the company generated $733.4 million in reserve revenue and allocated $460.6 million to distribution and transaction costs, leaving $272.8 million in net reserve revenue before operating expenses.