--- title: "CRCL: Results Push Back at Bears — Can the First Stablecoin Stock Stay Steady?\n\n---" description: "On Feb 25 pre-market (ET), stablecoin USDC issuer $Circle(CRCL.US) released Q4 2025 results. The biggest driver, interest income on reserve assets, is fairly transparent given public USDC market cap a" type: "topic" locale: "en" url: "https://longbridge.com/en/topics/38882656.md" published_at: "2026-02-25T14:33:36.000Z" author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- # CRCL: Results Push Back at Bears — Can the First Stablecoin Stock Stay Steady? --- Pre-market on Feb 25 ET, the USDC stablecoin issuer $Circle(CRCL.US) reported Q4 2025 results. While reserve interest income, its largest revenue component, is fairly transparent given public USDC market cap and Fed rates, and Circle’s share price is not tightly linked to quarterly prints, we can still glean changes in ecosystem build-out and operating efficiency from disclosures on **other income & rev. share, opex, and guidance**. These indicators help assess management’s strategic vision and execution. Overall, Q4 beat expectations, driven by a standout acceleration in the market’s focal point: 'other income'. We believe public USDC market cap data was skewed by outsized crypto drawdowns and capital outflows, which elevated redemption/burn volumes and led the market to underestimate the pace of USDC’s real ecosystem expansion. Specifically: **1\. Ecosystem: legacy use cases pressured by crypto weakness; new use cases continue to expand** For Q4, avg. USDC in circulation was $76.2bn; after peaking at $80bn in Oct, it eased to $75.3bn at quarter-end, up 2% QoQ and notably slower. New minting totaled $82.4bn and redemptions/burns $80.9bn, suggesting demand scenarios/users are broadening, yet crypto sell-offs drove more USDC redemptions in-period. Competitor USDT’s expansion did not slow, and traditional institutions kept issuing internal tokens. **As a result, USDC’s share did not rise, holding at roughly 28–29% for most of the year.** (2) Distribution of USDC saw Circle’s internal holdings increase further to 16.6%, again faster than we expected. Coinbase accounts for 24%, showing clear hoarding signs QoQ (for internal ecosystem needs), with the remaining 59.4% on Binance and other channels. (3) As of Q4-end, MeWs (crypto wallets on-chain with >$10) reached 6.8mn, with net adds of 0.5mn QoQ, continuing to slow. Because these are period-end readings, the deceleration likely reflects the dour year-end crypto tape. (4) On ecosystem expansion news, from late last year to now Circle added major partners including Deutsche Börse, Visa, and Polymarket. The Arc chain, open beta since Oct, has attracted 100+ traditional FIs for testing, and these platforms are expected to join the USDC ecosystem over time. Beyond L1 public chains, Circle is also expanding the CPN footprint to broaden USDC payment use cases. In Feb, CPN added direct local-currency-to-stablecoin rails across multiple regions in Asia and the Middle East. **2\. A small 'surprise' in revenue: non-interest income accelerated QoQ** The B2B-facing ecosystem build-out above contributes revenue beyond reserve interest, booked under 'other income'. In addition to enlarging the USDC market, this forms Circle’s second growth curve to counter pressure from lower reserve yields in a rate-cut cycle. Q4 other income reached $37mn; still small at <5% of revenue, but the QoQ acceleration trend is encouraging. Dolphin Research believes muted expectations likely tied to the USDC market cap drift lower post-Oct, unintentionally capping forecasts; however, most circulating USDC is used in crypto markets, so declines with crypto do not necessarily imply that 2B use-case expansion was impaired. **3\. GPM: more self-held USDC to buffer Coinbase rev. sharing** The market had worried that ecosystem expansion requires sharing reserve interest with partners, and Coinbase’s rising USDC mix could lift Circle’s distribution costs, pressuring GPM. In practice, Circle kept lifting its self-held USDC share to ease cost growth pressure. Coupled with software and payments infrastructure services that carry high margins, faster growth in other businesses lifted their revenue contribution. GPM came in at 40%, up 50bps QoQ. **4\. Efficiency gains land this year:** Operating efficiency did not show clear improvement this quarter, but it is mainly reflected in guidance. The company guides 2026 total costs and opex (ex-SBC and D&A) at $570–585mn, up only ~10% YoY and below market expectations. **5\. Forward growth: above estimates, but not dazzling** (1) On multi-year USDC growth, management still expects ~40% CAGR despite large swings at the turn of the year, modestly above market forecasts for the next three years. Dolphin Research suggests this qualitative mid-to-long-term guide can be set aside near term given market volatility; last year’s experience shows it does not assure short-term achievement. (2) Other income modestly beat; the company guides $150–170mn in 2026, implying +46% YoY, with Street largely aligned to the low end. Dolphin Research believes this bucket is where the company has more levers, and current guidance/consensus do not look high; we expect continued quarterly beats. **6\. Key financial metrics** ![表格描述已自动生成](https://pub.pbkrs.com/cms/2026/0/bFCz13Rvoi44j6oeqFEFT2ycGhv5QXSA.jpg?x-oss-process=style/lg) **Dolphin Research view** As USDC’s issuer operating a largely interest-income model, Circle should, in theory, be less sensitive to crypto volatility than Coinbase; 'stablecoin income' on Coinbase’s reports is seen as smoothing 'trading income'. **In practice, however, panic one-way declines in crypto materially impact USDC’s circulating balance** — in Jan, USDC market cap (circulating balance) fell from $76bn to $70bn at one point, reflecting severe crypto drawdowns that triggered heavy selling and USDC redemptions, further converted into USD fiat. For USDC redeemed into USD, Circle simultaneously recovers and burns the tokens. Though Circle is vigorously expanding USDC use cases beyond crypto investing (payments/settlement, tokenized funds), **it is hard to offset crypto outflows in the short run** — currently, 60–70% of USDC likely circulates within crypto trading activity. **Near-term sentiment is also pressured by regulation.** The 'CLARIFY' bill was temporarily shelved during Senate review, with key contention around whether platform 'incentives' to promote stablecoin use would be deemed 'interest' and thus prohibited. If incentives are allowed, stablecoins may be deemed securities under SEC oversight, imposing high disclosure/compliance requirements. The near-term issue is that USDC could face tighter constraints than USDT due to legislative uncertainty. USDT mainly circulates offshore in a relatively nebulous regulatory setting, making it more attractive to retail. Since CLARIFY’s review was shelved in mid-Jan, USDC’s circulating balance share vs. USDT has been falling. Conversely, once the bill is settled, institutions will likely prefer more compliant USDC, driving a rebound in the USDC/USDT ratio. **In sum, Circle’s stock near-to-mid term will be driven by three factors, in descending order:** **CLARIFY bill** progress (an interim compromise could emerge in Mar; a proposal is needed before Jul), **crypto market trend** (i.e., rate-cut expectations, now stable but less bullish than before), and **Circle’s proactive ecosystem expansion** (actively advancing). As for rate cuts’ impact on interest income, Dolphin Research still sees both priced-in and earnings effects as secondary to the three drivers above. **Ecosystem expansion pace has a larger impact on valuation sentiment** — whether the market assigns a sub-20x EV/EBITDA multiple akin to traditional banks/mature fin-techs, or >30x like growth fin-techs. **By focusing on ecosystem expansion,** Circle not only offsets lower rate drag via asset growth but also lifts true 'fin-tech' other income, **nudging the market away from a 'bank-like spread capture' low-multiple view.** These negative overhangs have been weighing on short-term risk-on appetite. **At yesterday’s close, with a $14.5bn market cap and 2026/2027 consensus, EV/Adj. EBITDA is ~25x/~15x,** now reset between traditional financials and fin-tech platforms, and Q4’s beat should further digest part of the valuation and improve the risk-reward. From a mid-to-long-term ecosystem expansion lens, EV/USDC market cap = 0.19x. This is still above the IPO initial pricing of 0.12x (the $6.8bn IPO was visibly at a trough), but already at post-listing lows for Circle and well below Tether’s valuation/USDT ratio (peak 2.7x; if rumored fundraising target fell from $20bn to $5bn and equity share unchanged, implied new valuation would be $170bn vs. $185bn USDT, or ~0.92x). **Therefore, barring a sharp further crypto sell-off that triggers larger USDC redemption stress and a sustained net drop in USDC market cap, there is little reason for Circle to keep selling off while USDC scales up (with no persistent insider selling as a cautionary sign).** **In an extreme capitulation scenario, the IPO initial 0.12x valuation/USDC market cap implies a strong ~$9bn support.** **Detailed analysis below** **I. Circle’s core business framework** Circle issues USDC and its revenue mainly comes from: (1) interest on reserve assets, tied to USDC in circulation and U.S. Treasury yields; and (2) other income, including Web3 software (SaaS), CPN payments (per amount/transaction fees), and Arc chain service/gas fees (per transaction). To mitigate rate cuts, Circle is actively growing other income; in 2025 it primarily pushed CPN payments and Arc. Other income has approached ~5% of revenue and is expected to accelerate from here. On costs, internal opex is largely comp & benefits, while external costs are dominated by rev. sharing and transaction costs at ~60% of revenue (mostly to Coinbase). Adj. EBITDA margin is ~20% after adding back D&A and SBC, below many fin-tech platforms. Thus, expansion alongside rising rev. share costs has led some investors to worry about near-term profitability pressure. From a longer horizon, ecosystem expansion matters more. USDC is No. 2 by market share among stablecoins; vs. USDT, its advantage is compliance. Once CLARIFY lands, USDC’s 'relative' edge should attract more institutional capital. **II. USDC ecosystem: faster minting; short-term pressure from crypto downturn** Q4 avg. USDC circulation was $76.2bn, ending at $75.3bn, +2% QoQ, with net adds mainly in Sep–Oct. Minting hit $82.4bn; redemptions $80.9bn, with net issuance clearly slowing vs. Q3. Per Coingecko, USDC’s circulating balance fell rapidly amid Jan’s panic crypto sell-off, then rebounded in early Feb. **1\. USDC external market share** USDC’s share slipped from Oct’s peak but is still +3pct vs. early year. Versus USDT, the USDC/USDT ratio fell sharply during the two major crypto drawdowns in Nov and Jan; from Feb onward, despite continued soft crypto, volatility narrowed, USDC scaled back up, and the ratio recovered. ![图表描述已自动生成](https://pub.pbkrs.com/cms/2026/0/GF5RpUW8C7B5gXfhxm7RLEJZEy6uMfpT.jpg?x-oss-process=style/lg) The logic: in the main use case of stablecoins — crypto investing — panic declines and liquidations drive fiat USD redemptions, with corresponding stablecoin burns. USDT’s higher penetration in gray-market flows and legitimate cross-border trade dampens volatility impact relative to USDC. Meanwhile, the mid-Jan delay of CLARIFY review and concerns over regulatory jurisdiction pushed retail toward USDT operating in a 'fuzzier' offshore regime rather than USDC. Conversely, if a compromise gains traction in Mar and the bill proceeds, North American institutions should prefer USDC. **2\. USDC internal channel competition** Circle’s internal USDC holdings continued to rise to 16.6%. Based on Coinbase’s Q4 disclosure, its share of USDC circulation rose to 24% QoQ, which seems counter to Circle’s push beyond existing ecosystem boundaries. Dolphin Research believes **Coinbase may be hoarding to defend its ecosystem position** (since Coinbase stopped detailing self-held USDC this quarter, we only approximate that **self-held USDC rose ~60% QoQ from ~$3.7bn to ~$6.0bn**). **Another core ecosystem metric — effective digital wallets** — reached 6.8mn by Q4-end, with net adds of 0.5mn QoQ, likely continuing to slow under market pressure. ![图示描述已自动生成](https://pub.pbkrs.com/cms/2026/0/bE2LBkVMKrpR7MRjzZuF13vFBa82f9vv.jpg?x-oss-process=style/lg) **III. Other income continues to beat** Since ~95% of Circle’s revenue — reserve interest — is essentially public, the main source of 'surprise' is other income, which continued to beat in Q4. Specifically, other income includes minting, trading, custody, Web3 APIs, tokenized fund USYC, and CPN fees launched last Apr (fixed access + per-transaction settlement/audit fees, Arc gas, etc.). Q4 other income was $37mn, +29% QoQ. The company guides $150–170mn for 2026; although above consensus, the growth trajectory looks cautious, and Dolphin Research thinks normal USDC expansion could drive further beats. ![图表, 直方图描述已自动生成](https://pub.pbkrs.com/cms/2026/0/wysLmRDPVFSSfDVRscKbsxbZmsrjgMAJ.jpg?x-oss-process=style/lg) For the larger revenue bucket, trends hinge on USDC expansion and the U.S. Treasury rate backdrop. Q4 avg. USDC scale was up ~100% YoY; rates fell to ~3.8%, -70bps YoY; reserve interest income grew 69% YoY, rebounding vs. Q3 on easy comps. ![图表, 条形图描述已自动生成](https://pub.pbkrs.com/cms/2026/0/2PSjeTkxvwYLkDba9dKDgw2UcoddrL9N.jpg?x-oss-process=style/lg) ![图表描述已自动生成](https://pub.pbkrs.com/cms/2026/0/z1ZqmrhTTWPZKxRDpuG5ieWgss5vAkT9.jpg?x-oss-process=style/lg) **IV. More self-holdings to keep GPM stable** Q4 GPM rose 50bps QoQ to 40%. Circle continued increasing self-held USDC to ease rising rev. share pressure; together with high-margin software/payments infrastructure, faster other business growth lifted mix. **No clear efficiency improvement this quarter, but it shows in guidance:** Q4 costs largely rose in line with revenue; Adj. EBITDA was $144mn with an 18.7% margin, slightly above expectations thanks to steady GPM. For 2026, total costs and opex (ex-SBC and D&A) are guided at $570–585mn, up ~10% YoY and below Street. ![图表, 条形图描述已自动生成](https://pub.pbkrs.com/cms/2026/0/zFXtvXcM9HeFHjxuSV1zXEQ2LRVTvDeD.jpg?x-oss-process=style/lg) ![图表, 直方图描述已自动生成](https://pub.pbkrs.com/cms/2026/0/EBpbtNGA6gkobMGFStdVGvhHqvrDW5m1.jpg?x-oss-process=style/lg) **Dolphin Research historical on 'Circle'** **Earnings** Aug 13, 2025 summary '[Circle (Trans): Broaden Use Cases and Distribution](https://longbridge.cn/topics/32882658?channel=SH000001&invite-code=355628&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=a0e88dad-f79d-451c-89da-6b5d7018cc14)' Aug 13, 2025 earnings take '[Circle: Big Promises, Honest Reduction](https://longbridge.cn/topics/32878574?channel=SH000001&invite-code=355628&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=e3430345-c92b-4e12-844e-b787f9624f76)' **Deep dives** Jul 3, 2025 Initiation Part III '[Coinbase vs Circle: Symbiosis and Strain in Stablecoins](https://longportapp.cn/zh-CN/topics/31451868?invite-code=032064)' Jul 2, 2025 Initiation Part II '[Stablecoins: Don’t Doubt It! Coinbase’s iPhone Moment](https://longportapp.cn/zh-CN/topics/31396708)' Jul 1, 2025 Initiation Part I '[Coinbase: On-chain Booms — Can the Water Seller Coast?](https://longportapp.cn/zh-CN/topics/31350474)' **Risk disclosures and statements:** [**Dolphin Research Disclaimer and General Disclosure**](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [CRCL.US - Circle](https://longbridge.com/en/quote/CRCL.US.md) - [COIN.US - Coinbase](https://longbridge.com/en/quote/COIN.US.md) - [V.US - Visa](https://longbridge.com/en/quote/V.US.md) - [DB1.DE - Deutsche Boerse AG](https://longbridge.com/en/quote/DB1.DE.md) - [CONL.US - GraniteShares 2x Long COIN Daily ETF](https://longbridge.com/en/quote/CONL.US.md) - [07311.HK - XI2CSOPCOIN](https://longbridge.com/en/quote/07311.HK.md) --- > **Disclaimer**: This article is for reference only and does not constitute any investment advice.