Circle Defends USDC Business Model Amid Rivalry with Open USD
Written with artificial intelligence.
Circle is defending its USDC business model as Coinbase, its largest partner, supports the Open USD network, which offers businesses a greater share of stablecoin reserve income. In a recent blog post, Circle highlighted its profit margins and costs associated with compliance and product development.
Circle's Defense of USDC
Circle, the issuer of the USDC stablecoin, has recently defended its economic model as competition intensifies with the launch of Open USD, a rival stablecoin network supported by Coinbase, Stripe, and BlackRock. Open USD aims to provide businesses with more income from the reserves backing stablecoins, raising questions about the distribution of interest earned on these assets.
In a blog post, Chief Commercial Officer Kash Razzaghi revealed that Circle retained approximately 7 cents in net profit for every dollar earned in revenue during the first half of 2026. Circle reported total revenues of about $1.4 billion, with distribution and transaction costs reaching $819 million. The remaining $473 million was allocated to compliance, liquidity, product development, and stock-based compensation.
While Coinbase remains Circle's largest partner for USDC, it also backs Open USD, which allows businesses to mint and redeem stablecoins without incurring fees, redirecting reserve income after management fees to participants. Circle's blog post did not explicitly mention Open USD but acknowledged other competitors, including the Paxos-led Global Dollar Network, which also shares reserve income with its users.
Circle emphasized that costs related to redemption processes and compliance do not disappear simply because a different model is proposed. Additionally, Circle has been working on attracting more distribution partners, including a $100 million investment from Binance as part of a five-year agreement tied to USDC transactions.
Standard USDC redemptions remain free and typically settle within two business days. Moreover, qualifying customers using the Circle Payments Network can access near-real-time redemptions at no cost, enhancing the service's appeal to users.