--- title: "Circle: AI Agents Need Currency with API Access" type: "News" locale: "en" url: "https://longbridge.com/en/news/286026566.md" description: "Circle's Q1 financial report appeared to miss expectations on the surface but hid highlights: reserve income fell short, yet the core metric RLDC (Revenue Less Distribution Costs) beat estimates by 3%, and USDC on-chain transaction volume surged 263% year-over-year. The bigger story lies in the narrative shift—the ARC Token presale raised $222 million, backed by top-tier institutions like a16z and BlackRock; Circle Agent Stack targets AI agent settlement infrastructure, with Citigroup setting a $243 price target, implying 114% upside. However, interest rate risk remains the Achilles' heel of this bold bet" datetime: "2026-05-12T02:54:44.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/286026566.md) - [en](https://longbridge.com/en/news/286026566.md) - [zh-HK](https://longbridge.com/zh-HK/news/286026566.md) --- # Circle: AI Agents Need Currency with API Access Circle's Q1 narrative is shifting: it remains a stablecoin issuer highly dependent on USDC reserve yields, but both management and sell-side research are pushing the focus toward a larger story—whether USDC can become a programmatic settlement currency for AI agents via API calls. The latest financial report was not uniformly strong. Circle's total revenue and reserve income for Q1 amounted to $694 million, a 20% year-over-year increase, but fell short of Citigroup and market expectations. However, Revenue Less Distribution Costs (RLDC) reached $287 million, exceeding expectations. Adjusted EBITDA was $151 million, with an adjusted EBITDA margin of 53%. The company maintained its full-year guidance. Signals from business activities were more positive. USDC circulation at the end of the quarter stood at $77 billion, up 28% year-over-year and roughly flat quarter-over-quarter; on-chain transaction volume surged 263% year-over-year to $21.5 trillion. **Management stated that USDC use cases in enterprise payments, cross-border payments, capital market collateral, and AI agent payments are expanding.** Two new themes attracted greater market attention. First, the ARC Token presale raised $222 million, implying a fully diluted network valuation of $3 billion, though related revenues and incentives have not yet been included in guidance. Second is the Circle Agent Stack. In a research note dated May 11, Citigroup’s Peter Christiansen stated that **Circle is evolving from a stablecoin issuer to infrastructure for the "agent economy," where AI agents can use USDC for programmatic transactions. Circle’s full-stack approach positions it to become the default settlement rail for agent-based commerce.** ## Financial Report Quality: Revenue Miss, RLDC More Critical Circle's total revenue and reserve income for Q1 were $694 million, below Citigroup and market expectations, primarily dragged down by reserve yield. The reserve return rate during the quarter was 3.5%, a decrease of 66 basis points year-over-year, reflecting the decline in SOFR, and also below Citigroup’s expectation of 3.59%. However, RLDC performed better. The company’s Q1 RLDC was $287 million, 3% higher than both Citigroup and market expectations. The RLDC margin was 41.4%, an increase of 1.5 percentage points year-over-year and 1.3 percentage points quarter-over-quarter. CFO Jeremy Fox Geen stated that the improvement in RLDC margin stemmed from growth in other income, an increase in the scale of USDC held within the Circle platform, and a mild retreat in some high-incentive channels. He also mentioned that **Coinbase’s share of USDC circulation increased during the quarter, especially in the last month, having a certain mix impact on margins.** Adjusted operating expenses were $136 million, a 32% year-over-year increase, reflecting the company’s continued investment in product, distribution, and operational infrastructure. Adjusted EBITDA was $151 million, up 24% year-over-year. However, Citigroup’s research note pointed out that the company adjusted the definition of adjusted EBITDA this quarter, involving stock-based compensation expenses. Calculated using the previous methodology, adjusted EBITDA would be approximately $141 million, slightly below Citigroup’s expectation but still above market consensus. This means Q1 cannot be simply interpreted as a sudden significant improvement in profits. A more accurate assessment is that while there were flaws on the revenue side, RLDC quality was good, and profit performance exceeded market expectations. ## USDC: Transaction Volume Surge, Platform Stickiness Improves USDC circulation at the end of the quarter was $77 billion, up 28% year-over-year and basically flat quarter-over-quarter. Jeremy Fox Geen stated that against the backdrop of the digital asset market falling about 45% since its October 2025 high, USDC circulation remained resilient, indicating growing non-crypto trading uses and real-world application scenarios. USDC held within Circle’s platform infrastructure amounted to $13.7 billion, a 3.5-fold year-over-year increase, accounting for 18% of total circulation. Management views this metric as evidence of improved platform stickiness and infrastructure adoption. Trading activity grew even faster. Circle stated that USDC on-chain transaction volume increased 263% year-over-year to $21.5 trillion. Jeremy Allaire indicated that third-party data sources, including Solana transaction volumes, show USDC Q1 transaction volume approaching $30 trillion, accounting for about 80% of all on-chain transaction volume. **Management also cited commercial transaction volume data disclosed by Visa, stating that USDC continues to gain market share in stablecoin transactions, currently accounting for 63% of all stablecoin transactions. Circle also stated that USDC minting and redemption volume in Q1 approached $150 billion.** ## Enterprise Payments: CPN Becomes Entry Point for Non-Speculative Demand Circle is pushing USDC into payment processes for enterprises and financial institutions. Jeremy Allaire mentioned on the conference call that Meta has started using USDC to pay creators, DoorDash uses USDC to pay drivers, and Polymarket adopts USDC for deposits and settlements. Regarding financial institutions, Airbor Bank uses USDC to support 24-hour banking services. Circle also mentioned expanding relationships with top South Korean exchanges. In capital markets, the company is participating in DTCC’s tokenized securities trading tests and has seen early demand for USDC as collateral on regulated derivatives exchanges. Corporate treasury management is also a key direction. Circle recently established a partnership with Kyriba, which serves thousands of enterprises and multiple Fortune 100 companies, aiming to embed USDC payment processes into corporate treasury management solutions. Ramp is also adopting USDC in international and domestic use cases. The Circle Payments Network (CPN) continued to expand in Q1. At the end of the quarter, CPN’s annualized total payment volume based on the past 30 days was $8.3 billion, a 17% quarter-over-quarter increase. As of May 7, this metric approached $10 billion, an increase of nearly 75% from the last disclosure. CPN has connected to over 136 financial institutions, a 36% quarter-over-quarter increase. Management stated that current CPN growth mainly comes from B2B cross-border payment flows. The company also launched CPN Managed Payments to help banks, financial institutions, and payment service providers handle access barriers such as licensing, USDC liquidity, stablecoin custody account infrastructure, and blockchain compliance operations. ## ARC: New Variable Not Yet in Guidance ARC was the new variable that attracted the most investor attention during this conference call. Circle stated that the ARC testnet is performing well, users are trading at scale, the developer community is continuing to grow, and the mainnet is launching soon. Circle announced that the ARC Token presale raised $222 million, corresponding to a fully diluted network valuation of $3 billion. The presale was led by a16z crypto, with participants including Apollo Funds, ARK Invest, BlackRock, Janus Henderson Investors, Bullish, Intercontinental Exchange, Marshall Wace, SBI Group, Standard Chartered Ventures, General Catalyst, Haun Ventures, and IDG Capital. **Management stated that ARC Tokens will be used for network launch and expansion, supporting governance, staking, security, and other protocol functions. Jeremy Allaire indicated that Circle retains 25% of the ARC Tokens. The whitepaper shows that 60% of the tokens are allocated for ecosystem grants, airdrops, and other incentive programs.** Jeremy Fox Geen stated that the current full-year 2026 guidance does not include ARC Token presale proceeds, ARC incentive programs, or any ARC-related revenue streams. Once ARC Tokens are created and delivered in the future, the company will recognize the related value as other income. Circle plans to update its guidance perspective in the next earnings conference call. This means ARC may add revenue sources but could also bring changes to incentive costs and margin structure. Management has not yet quantified these impacts. ## Agent Stack: AI Agents Need a Programmable Settlement Layer **The Circle Agent Stack is the core of this narrative shift. Its focus is not on packaging stablecoins as an AI concept, but rather answering a more specific question: If AI agents need to autonomously call services, pay fees, and complete settlements, what currency and infrastructure should they use?** Circle’s answer is USDC and a complete service stack. The company announced key components of the Circle Agent Stack during the conference call, including Agent Wallets, Agent Nano Payments, Agent Marketplace, and Circle Platform CLI. **Agent Wallets allow AI agents to build on-chain wallets, conduct transactions, access USDC, and operate under preset policies and security guardrails. Agent Nano Payments support USDC transactions as small as one-millionth of a cent, targeting high-frequency machine-to-machine payments. Related features support the x402 standard, which Circle states it is helping to design.** Circle stated that currently, 99.8% of x402 agent payments are settled using USDC. The first version of the Agent Marketplace is live, offering over 500 service endpoints for agents to discover, pay for, and call. **This is also the part most valued in Citigroup’s research note. The report believes that Agent Stack strengthens Circle’s path from stablecoin issuance to infrastructure for the agent economy. If AI agents truly need to use funds via APIs in the future, Circle wants USDC to be not just a wallet frontend, but the underlying settlement rail.** ## Valuation: $243 Price Target Bets on Long-Term Scenario **Citigroup gave Circle a price target of $243, implying an expected stock return of 113.8% based on the closing price of $113.67 on May 8, with a rating of "Buy/High Risk."** However, this target price is not based on next quarter’s profits but is built on a long-term scenario for 2031. Key assumptions include a 40% compound annual growth rate for USDC circulation over the next five years, a reserve return rate of 2.80%, declining distribution costs, and continued release of operating leverage. In Citigroup’s model, by 2031, Circle’s net reserve income will be approximately $5.6 billion, accounting for 74% of the total revenue scenario. **This indicates that even if Agent Stack and CPN provide new narratives, reserve income remains the main pillar in the valuation model.** CPN is also included in the model, but the assumptions are not aggressive: annual processed payment volume of $300 billion, accounting for 0.15% of the total volume of customer-oriented cross-border transfers, with a take rate of 0.50%, corresponding to $1.5 billion in revenue, accounting for 20% of the total 2031 revenue scenario. Cost-side assumptions are equally critical. Citigroup assumes operating expenses will grow at a 25% compound annual growth rate. Under this condition, the adjusted EBITDA/RLDC margin can reach approximately 81%; if the free cash flow conversion rate is 80%, free cash flow in 2031 will be $5.3 billion. The valuation also uses a 2.0% terminal growth rate, a 9.0% WACC, and includes $1.6 billion in net cash post-IPO. ## Risks: Interest Rates Remain the Model Foundation Circle is talking about payment networks, programmable currency, and AI agent settlement, but its business model remains highly exposed to interest rates. **Citigroup’s calculations show that a 25 basis point drop in SOFR would lead to a mid-single-digit decline in revenue and a mid-double-digit decline in EBITDA. If the environment enters a long-term low-interest or zero-interest rate scenario, Circle’s operating model would be significantly impacted.** Regulation is the second variable. Jeremy Allaire stated that Circle hopes stablecoin incentives match real-world utility, including real transactions, real payment volumes, and real activity, rather than purely idle yields. Circle President Heath Tarbert, discussing the Clarity Act, stated that the act would help blockchain, digital assets, and traditional financial institutions participate in digital asset activities, and mentioned that Title IV involves scenarios for banks, broker-dealers, and custodians using stablecoins. Management also mentioned the GENIUS Act and the Clarity Act, believing that regulatory clarity will enhance the confidence of enterprises and financial institutions in adopting stablecoin technology. However, Citigroup’s research note also warned that future regulations might require stablecoin issuers to maintain safe reserves, thereby affecting the operating model. The stablecoin industry itself has tail risks. If a stablecoin issuer de-pegs due to operational failure or cyberattack, it could trigger a broader stablecoin run. Such risks are difficult to incorporate into quarterly models but directly affect the valuation framework. ## Next Observation Points: ARC Revenue, CPN Volume Growth, and AI Payment Implementation Circle maintained its full-year 2026 guidance unchanged. The company also maintained several outlooks, including a multi-year 40% compound annual growth target for USDC circulation, other income in the range of $150 million to $170 million, RLDC margin of 38% to 40%, and adjusted operating expenses of $570 million to $585 million. However, current guidance does not include ARC Token presale proceeds, ARC incentive programs, or any ARC-related revenue. The next earnings conference call will be a key window, where investors will focus on how ARC Token revenue is recognized, how incentives affect costs and margins, and whether the ARC network can drive a growth flywheel for USDC, CPN, and other digital assets. The conclusion of this financial report is not complex: Q1 numbers had flaws, but core metrics did not stall; USDC activity and platform share continued to improve; Agent Stack brings Circle a valuation narrative of "settlement infrastructure for the AI era." The issue is that for this story to materialize, it cannot bypass three hard conditions: USDC must continue to grow, the interest rate environment must not deteriorate significantly, and regulation must not rewrite the cost structure. ### Related Stocks - [C.US](https://longbridge.com/en/quote/C.US.md) - [CRCL.US](https://longbridge.com/en/quote/CRCL.US.md) ## Related News & Research - [Could CLARITY Act Stablecoin Rules Quietly Recast Circle (CRCL) As Core Digital Dollar Infrastructure?](https://longbridge.com/en/news/285627976.md) - [Circle Launches AI Infrastructure to Power the Agentic Economy | CRCL Stock News](https://longbridge.com/en/news/285922739.md) - [Dear Circle Stock Fans, Mark Your Calendars for May 11](https://longbridge.com/en/news/285764086.md) - [Why Circle Internet stock jumped 19% Monday afternoon](https://longbridge.com/en/news/285998304.md) - [Stablecoin firm Circle reports earnings on Monday. AI could be in focus.](https://longbridge.com/en/news/285851231.md)