In the first conference call after the IPO, Circle focused on the "profit model": there are two ways to make money, and the goal is "winner takes all."

On Tuesday before the U.S. stock market opened, “the first stock of stablecoins” Circle released its first earnings report post-IPO, driven by a significant increase in USDC circulation, with total revenue and reserve income growing by 53% year-on-year to $658 million, although accounting profits were severely impacted by large non-cash expenses.

During the earnings call held later, co-founder, chairman, and CEO Jeremy Allaire stated that the company plans to launch a self-developed blockchain named Arc in the second half of the year, an open blockchain designed for stablecoin finance, focusing on scenarios such as payments, foreign exchange, and capital markets, with USDC serving as the native asset for transaction fee payments on the network.

CFO Jeremy Fox-Geen expressed strong confidence in the company's profit outlook, believing that with the strengthening of network effects, the growth of USDC holdings on the platform, and the development of high-margin other revenues, the company's RLDC profit margins will receive long-term support.

When asked about the acquisition strategy, Allaire expressed a cautious stance, emphasizing that Circle would not pursue large, complex acquisitions simply to add additional business lines alongside existing operations, and may prefer organic growth and strategic small-scale acquisitions.

How does Circle make money?

According to Jeremy Fox-Geen, Circle primarily "makes money in two ways."

First, by monetizing the currency supply on the network through reserve income, which is the income earned from holding cash-equivalent assets to support our stablecoins; second, by monetizing certain transaction processes and elements of network infrastructure.

Jeremy stated that while the second type of income is currently small, it is growing, has high profit margins, and has the potential for rapid expansion as network adoption and usage increase.

For example, regarding the upcoming Arc chain, Jeremy mentioned that its transaction fees will also become a new source of income for USDC.

The stablecoin market is a "winner-takes-all" market

According to Jeremy, stablecoins are network businesses with significant network effects, where liquidity and utility complement each other and drive growth, making stablecoins a "winner-takes-all" market.

Circle's deep liquidity infrastructure provided in major global financial centers, along with facilitating over $1 trillion in USDC issuance and redemption since 2018, constitutes a competitive moat that is difficult to replicate.

Jeremy noted that there is increasing third-party research on the growth of stablecoin circulation, with multi-year forecasts showing compound annual growth rates ranging from 25% to 90%, with a median of 60%. Circle's core model anticipates a multi-year cyclical USDC growth of 40% compound annual growth rate.

Jeremy emphasized that Circle, as an internet platform business, has a highly scalable model and inherent operational leverage, with the potential to achieve strong profit growth and margin expansion in the future. With the strengthening of network effects, the growth of USDC holdings on the platform, and the development of high-margin other revenues, the company's RLDC profit margins will receive long-term support. **

Announcing the Self-Developed Blockchain Arc, Planned for Launch by Year-End

The Arc blockchain that Circle is about to launch represents a significant strategic shift for the company in the stablecoin infrastructure space. According to the light white paper for this blockchain, Arc will not only use USDC as the native asset for transaction fees but will also support other local stablecoins.

According to Allaire, Arc is a new first-layer blockchain compatible with Ethereum infrastructure but operates as an independent network:

“We hope Arc can support all applications of stablecoin finance, payments, foreign exchange, and capital markets. It is designed to support mainstream regulated financial institutions that wish to build and develop financial products and services on-chain.”

Allaire added that, to date, there has not been a blockchain infrastructure that can “meet the most stringent needs of major financial companies and enterprises,” and Arc will be specifically designed for this purpose.

Some analysts pointed out that this move reflects a broader industry trend.

According to previous media reports, after acquiring the stablecoin platform Bridge last year, payment giant Stripe recently announced that it is building its own first-layer blockchain focused on payments; Robinhood has also disclosed plans for a second-layer blockchain.

After the GENIUS Act, Mainstream Institutions Accelerate Adoption of Stablecoins

The passage of the GENIUS Act has become an important catalyst, driving mainstream financial institutions to accelerate their exploration of stablecoin technology.

The meeting introduced that Circle has established partnerships with banks and payment infrastructure providers, including Fiserv, FIS, CorPay, and Matera, which provide core infrastructure for thousands of banks and financial institutions.

In the digital asset space, Circle is expanding its partnership with Binance, which will make USYC available as collateral, unlocking powerful use cases for yield tokens on the world's largest exchange. A new partnership with OKX will promote USDC to its 60 million users, with OKX adopting Circle's wallet technology and Circle Mint infrastructure integration.

Traditional payment network giants like Visa and Mastercard have publicly announced plans to expand the availability of USDC on their networks. Stripe has made USDC the core of its new global stablecoin business financial accounts, while major cross-border payment companies like Remitly, MoneyGram, and Zepz are integrating USDC into their payment networks.

Prudent M&A Strategy, Focusing on Core Business

When asked about the M&A strategy, Allaire stated that the company will maintain a “prudent and thoughtful” approach. He emphasized that Circle will not pursue large, complex acquisitions simply to add additional business lines alongside its existing operations.

Allaire stated:

“I think our strategy is not to try to make large, complex acquisitions that simply add other business lines next to our existing business. We take a full-stack integrated platform perspective, so we only want to do those things that really align with our product requirements.” This statement indicates that Circle may be more inclined towards organic growth and strategic small-scale acquisitions.

Below is the transcript of Circle's earnings call (translated with AI assistance):

Circle Internet Q2 2025 Earnings Call

Meeting Date: August 12, 2025

Company Name: Circle Internet

Source: Circle Internet

Host's Remarks:

Hello everyone, thank you for waiting. I am Tiffany, and I will be the host for today's meeting. Now, I would like to welcome everyone to Circle Internet Group's Q2 2025 earnings call. All lines have been muted to prevent background noise. There will be a Q&A session after the speakers finish their remarks.

Now, I will hand the meeting over to John Andrews, Vice President of Capital Markets and Investor Relations. John, please go ahead.

John Andrews, Vice President of Capital Markets and Investor Relations Remarks:

Good morning, everyone. Welcome. I am John Andrews, Vice President of Capital Markets and Investor Relations at Circle, and I appreciate everyone joining us for our Q2 2025 earnings call. We are pleased to have you all participate this morning; this is another key step in our journey as a public company and our first earnings call.

Joining me today are our co-founder, CEO, and Chairman Jeremy Allaire, as well as our Chief Financial Officer Jeremy Fox-Geen. This morning, we have released our earnings press release and earnings presentation on Circle's investor relations website at investor.circle.com. The transcript of this meeting will also be published on that site.

I need to remind everyone that our earnings release, presentation, and this meeting contain forward-looking statements. Because forward-looking statements are inherently subject to risks and uncertainties, some of which are unpredictable or quantifiable and some of which are beyond our control, you should not consider these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not occur or happen, and actual results may differ materially from those projected in the forward-looking statements. Information regarding risks, uncertainties, and other factors that could cause these results to differ is included in our filings with the SEC.

We will also disclose non-GAAP financial measures during today's meeting. Definitions of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures can be found in our earnings release and earnings presentation on our investor relations website at investor.circle.com. Non-GAAP financial measures should be considered as a supplement to, and not a substitute for, GAAP measures.

Now, I am pleased to hand the meeting over to Jeremy Allaire

Jeremy Allaire, Co-founder, Chairman, and CEO:

Thank you, John. It's a pleasure to be here this morning. It is my honor to lead Circle's IPO and host our first earnings call. We are excited to work with many world-class talents, partners, and investors. We founded this company 12 years ago with an ambitious mission: to build a new internet financial system using blockchain and digital currency, enhancing global economic prosperity through frictionless value exchange. We, along with the entire market, are in the early stages of realizing this vision, transitioning from the early adoption phase of blockchain technology and digital currency to an accelerating mainstream adoption phase.

I would like to start with some key highlights from 2025. USDC, as the core of our stablecoin network, has grown to $61.3 billion as of June 30, and accelerated growth in the third quarter has brought the circulation to $65.2 billion as of August 10, a year-on-year increase of approximately 90%, and a year-to-date growth of 49%, making USDC the fastest-growing major stablecoin in the past year.

In the second quarter, the on-chain transaction volume of USDC increased 5.4 times year-on-year, reaching nearly $6 trillion. Our transaction volume also accelerated in the third quarter, with $2.4 trillion in transaction volume just in July. We have been rapidly expanding Circle's platform and network, launching significant new products, including the Circle Payment Network, which we believe will achieve breakthroughs in global capital flow by building an on-chain native payment network that can transfer funds faster and more efficiently, opening up new utility through programmable payments.

The Circle Gateway enables a seamless cross-chain USDC experience, and we have added eight new blockchain partners, as well as Arc, our new Layer 1 blockchain network, which we are announcing today and will detail later. Following the IPO and the GENIUS Act, we have experienced rapid expansion in business opportunities with major mainstream companies across finance and technology, including companies from around the world. From a corporate mission perspective, we have joined Pledge 1%, a global corporate philanthropy movement. To fulfill this commitment, we have reserved 2.7 million shares of Class A common stock for future donations to our Circle Foundation before the IPO.

As we look at the entire stablecoin market, we believe that the total addressable market for stablecoins and our products is enormous, with US dollar stablecoins accounting for only 1% of the U.S. M2 money supply, yet the supply of stablecoins continues to grow rapidly. Today, Circle operates the world's largest regulated stablecoin network. We often talk about this. Stablecoins are network businesses with significant network effects. The growth of our stablecoin network is driven by our platform, blockchain protocols, and developers building applications and services on our network. This expands the Circle on-chain ecosystem and has been the classic flywheel driving the growth of our stablecoin network since its launch in 2018

Like other internet platforms and online businesses, stablecoins operate in a winner-takes-all market, where liquidity and utility complement each other and drive growth. There are already many regulated and unregulated USD stablecoins, and more will emerge in the future, but the strength and resilience of the Circle network effect puts us in a favorable position for competition and growth. Turning to the regulatory environment, with the signing of the GENIUS Act, Circle's market and competitive advantages have been further solidified, creating a strong tailwind for Circle. We believe this legislation will accelerate the adoption of stablecoins by major financial institutions, mainstream businesses, and technology companies, ultimately driving broader use of stablecoins in retail and wholesale payments as well as in CRA-5 capital markets. This could be a catalytic moment for the mainstream scaling of stablecoins, and we have already seen this in our business momentum.

Turning to our products and platform. We continue to make progress on our core digital asset products USDC, EURC, and USYC. For USDC, we will expand distribution to eight new blockchain networks by 2025 and significantly enhance the availability of CCTP version 2, both of which continue to solidify USDC's position as the most liquid and usable on-chain USD stablecoin. We now also offer the yield token USYC, which can be used as collateral in both digital asset and traditional capital markets, with 24/7 liquidity between USYC and USDC.

We are now executing this strategy, thanks to our expanded partnership with Binance, which will now make USYC available as collateral, unlocking the powerful use of USYC on the world's largest exchange, where we have already seen adoption accelerating. We continue to expand our core banking and liquidity capabilities, including partnerships with several globally systemically important banks, strengthening our unparalleled position in the industry. During the second quarter, we launched one of our most ambitious new product investments—Circle Payment Network, which is our initiative to transform international money flows, and we have already established active payment corridors in Hong Kong, Brazil, Nigeria, and Mexico.

We have rapidly developed a pipeline of over 100 financial institutions interested in launching on CPN. We have an ambitious roadmap to continue expanding CPN's functionalities and use cases, from international money transfers to other types of payments, such as consumer and B2B payments, and further into global capital markets and corporate financial services. We are very excited to see such a level of interest so shortly after the launch of CPN.

In July, we launched Circle Gateway, which eliminates the complexity of holding USDC across different blockchains and wallets, simplifying usability and accelerating transactions using USDC. This is a key building block for bringing USDC into more mainstream financial and payment applications and creates new revenue opportunities for Circle.

Now, I would like to talk about a very special and important new platform initiative we are announcing today, Arc. Arc is a new blockchain network launched by Circle, which we will roll out in the second half of this year. We are at a pivotal moment for the large-scale mainstream adoption of stablecoins in the financial system, with companies competing to build on this infrastructure. However, until now, the blockchain infrastructure necessary to meet the most stringent demands of major financial firms and enterprises simply does not exist. We provide this infrastructure through Arc.**

Arc is a new first-layer blockchain compatible with Ethereum infrastructure but operates as an independent network. Here are some key facts about Arc. We aim to create a way for institutions to pay blockchain fees quickly and predictably, which is simple from an accounting perspective and can provide very low-cost and stable fees. Therefore, in Arc, we use USDC itself as the native fuel fee currency. This eliminates the complexity of paying transaction fees with native tokens. Arc offers enterprise-grade performance and true settlement finality.

Financial institutions and regulators expect certainty in finality, and Arc will achieve this through Circle-audited professional validators and its novel consensus mechanism. Arc will also provide configurable privacy controls and optional confidential transfer features, which are crucial for real-world business and financial applications while supporting compliance regulation. Finally, Arc will be integrated into Circle's entire product portfolio and will provide optimal USDC liquidity and interoperability across the wide range of blockchain networks we already support. We are very excited about Arc and have shared more information on circle.com and the Arc website, including a brief document and platform details.

Now, let's turn to growth and adoption. In just the past few months, we have seen remarkable engagement and interest from major companies across various sectors of the financial system, as well as internet and technology companies partnering with Circle, which is consistent and accelerating worldwide. I want to highlight a few examples from our recent period. In digital assets, we have established and expanded key partnerships with Binance and OKX, two of the world's largest exchanges. In partnership with Binance, we have significantly broadened our collaboration, including a wider use of Circle technology. We are also seeing strong traction and partnerships in DeFi, including our plans to launch USDC on hyperliquid, one of the fastest-growing on-chain exchanges and ecosystems. Major cross-border payment companies like Remitly, MoneyGram, and Zepz are integrating USDC into their payment networks, and Stripe has made USDC the core of its new global stablecoin business financial accounts.

Visa, Mastercard, and other companies have publicly announced new products and plans to expand the availability and use of USDC on their networks. I am particularly excited that banks and payment infrastructure providers like Matera, Fiserv, FIS, and Corpay have announced transactions with Circle to add stablecoin functionality and our technology to their product infrastructure, collectively serving tens of thousands of banks and financial institutions

Now turning to the digital asset trading market, this remains an important priority and significant growth opportunity for Circle. Since we launched our initiative to promote the development of USDC in the digital asset market at the beginning of 2024, our share of spot trading volume has grown from 1% to 10% in the second quarter. Through our partnerships and growth initiatives, we are highly focused on continuous market share growth. Global digital asset companies are focused on collaborating with the most trusted and compliant leaders in the stablecoin space.

To summarize, let me reiterate the advantages of our stablecoin network. Circle has a unique leadership position in the mainstream adoption of blockchain and stablecoins. Our platform supports developers, businesses, and institutions to build on the Circle stablecoin network, leveraging our deep liquidity infrastructure and seamless global banking connections. We provide primary liquidity in every major financial center and have facilitated over $1 trillion in USDC issuance and redemption since 2018.

Through internet-scale distribution across global wallets, payment providers, banks, and exchanges, Circle is becoming the default choice for institutions selecting a stablecoin network. Our market-neutral model invites broad adoption of our platform, even among the most competitive participants. Our trusted regulatory status and long-term policy engagement, supported by the passage of the GENIUS Act, reinforce our position as the most reliable foundation in the industry. These advantages collectively create strong competitive barriers and network effects that compound to drive Circle's exponential growth.

Now, I will hand the topic over to our Chief Financial Officer Jeremy Fox-Geen.

Chief Financial Officer Jeremy Fox-Geen:

Thank you, Jeremy, and good morning everyone. I am pleased to join you for our first earnings call as a public company. I will first briefly outline the fundamentals of our business and financial model, and then discuss the financial and operational results for the quarter. As Jeremy mentioned, the stablecoin and network business has internet-scale potential, and successful networks have value and durability; our strategy is to build the largest stablecoin network.

We make money in two ways. First, we monetize the currency supply on the network through reserve income, which is the revenue we earn by holding cash-equivalent assets to support our stablecoins. We are also beginning to monetize certain transaction processes and elements of network infrastructure. While these other revenues are currently small, they are growing, have high margins, and have the potential for rapid expansion as network adoption and usage increase. We are an internet platform business with a highly scalable model and inherent operational leverage, with the potential for strong profit growth and margin expansion in the future.

Now let me review the quarter's performance. The Circle stablecoin network continues to grow strongly. On-chain USDC transaction volume increased 5.4 times year-over-year. CCTP transaction volume showed similar growth, increasing 4.1 times year-over-year, demonstrating the importance of blockchain interoperability Meaningful wallets, defined as wallets holding more than $10 USDC, grew by 68% year-on-year, with the adoption of USDC continuing to expand globally. The circulation of USDC reached $61.3 billion at the end of the quarter, a year-on-year increase of 90%, and as of August 10, it was $65.2 billion, growing 6.4% since the end of the quarter. The USDC held within the Circle platform infrastructure increased tenfold year-on-year, reaching 10% of the total circulation at the end of the quarter, with more partners using our platform infrastructure for development. The reserve yield in the second quarter was 4.14%, reflecting the decline in SOFR during this period.

Total revenue and reserve income in the second quarter increased by 53% year-on-year, reaching $658 million, with the growth in USDC circulation partially offset by lower reserve yields. Total distribution transactions and other costs increased by 64% year-on-year, reaching $407 million. The growth was due to the increased average balance of USDC held on the Coinbase platform and other partner incentives, as we continue to build and develop partnerships to drive the growth and adoption of USDC. As a result, our revenue minus distribution cost profit margin in the second quarter was 38%.

Other income in the second quarter increased to $24 million, a year-on-year increase of 3.5 times. This was primarily driven by a $13 million increase in subscription and service revenue, mainly from our blockchain network partnerships. Transaction revenue in the second quarter grew strongly to $5.8 million, up from $1.6 million in the first quarter. Our other income has a higher profit margin than our net reserve profit margin, overall increasing by 2.2 percentage points in the second quarter.

Total revenue and reserve income minus distribution, transaction, and other costs in the second quarter was $251 million, a year-on-year increase of 38%. Adjusted operating expenses, excluding depreciation and amortization, non-operating digital asset gains and losses, and stock-based compensation, were $128 million this quarter, as we continue to invest in platform growth at critical moments in the industry. Adjusted EBITDA for this quarter was $126 million, a year-on-year increase of 52%, achieving a 50% adjusted EBITDA profit margin, reflecting the strong operational leverage inherent in our business model.

Now, let me talk about our outlook. Our goal is to help investors and analysts understand our business and how we manage it as well as possible. We are at the beginning of a meaningful structural shift in the global currency market, and we are managing our business for long-term success. Therefore, we do not intend to provide short-term quarterly guidance. However, we do intend to provide annual guidance on certain key metrics. We will develop this guidance as needed in each quarter's financial results.

The circulation of USDC is not a predictable metric in the traditional sense and is, in many ways, a result of the overall activity economy. There is an increasing amount of third-party research on the growth of stablecoins, with multi-year forecasts of compound annual growth rates ranging from 25% to 90%, with a median of 60%. Our core model anticipates a multi-year cyclical USDC growth of 40% compound annual growth rate, reflecting our conservative nature

We expect other income in 2025 to be between $75 million and $85 million, primarily driven by subscription and service revenue from our blockchain network partnerships, which may vary by quarter, as well as transaction revenue, which is currently small but growing. We anticipate the RLDC profit margin in 2025 to be between 36% and 38%. While the RLDC profit margin was 39% in the first half of the year, we continue to invest in partnerships with industry-leading institutions to grow USDC adoption.

We expect adjusted operating expenses in 2025 to be between $475 million and $490 million, as we continue to invest in key areas to build our platform, capabilities, and global partnerships. This will represent a year-over-year growth rate of 20% to 24%.

In summary, we had a strong first half of the year and are accelerating execution in the face of significant opportunities. Thank you for the support and engagement of our investors and analysts, and we look forward to updating you on our progress in the next quarter.

Next, operator, we can now begin the Q&A portion of the conference call.

Host:

Your first question comes from Joseph Vafi of Canaccord. Please go ahead.

Analyst Joseph Vafi:

Hello, Jeremy and Jeremy. The performance here is outstanding, congratulations on the tremendous success of your IPO, and this is also your first earnings call. I have a few questions; first, the news about Arc is obviously very exciting. Do you see gas fees, etc., as the first step in the USDC revenue model—or rather, for transactions away from trading payers, will Arc and gas fees become the basis for broader USDC transactions? I have a quick follow-up question.

Co-founder, Chairman, and CEO Jeremy Allaire:

Sure. Thank you, Joe. There are a few aspects here. First, we are very excited about Arc. There is much more information about it. Arc is designed to support all stablecoin financial, payment, foreign exchange, and capital market applications; it is really designed to support mainstream regulated financial institutions that want to build on-chain and create financial products and services on-chain. So we are excited, and we believe a significant amount of traffic can shift to networks like Arc. Yes, gas fees denominated in USDC can become a source of revenue. When this enters the testnet and eventually launches on the mainnet, we will have more to say. But I also want to say, just for context, we have many emerging streams of transaction fee revenue; Jeremy mentioned the growth of transaction fee revenue in his remarks, which is very robust on an annualized basis, and we continue to see that growth. So many of the new products and services we are building include transaction fee components. Of course, this includes the situation when we expand CPN, including the premium features of Circle Mint, including the functionality of our yield token USYC. So we are adding more and more transaction fee models, but you are right, Arc does indeed have an underlying gas fee transaction fee model built on USDC

Analyst Joseph Vafi:

Okay. Great. Thank you, Jeremy. Regarding the USYC topic, could you perhaps delve deeper into the relationship with Binance's expansion, focusing on USYC, and maybe expand on USYC rather than just USDC to provide some insights? Thank you very much.

Co-founder, Chairman, and CEO Jeremy Allaire:

Certainly. There are several aspects to note. As I mentioned in my comments, we have expanded our partnership with Binance, including collaboration around USDC and USYC. For USDC, they continue to adopt Circle wallet technology. They have deeper support and integration with Circle wallet technology, which will help facilitate and grow the use of USDC on their platform, so they have been great partners, and they are investing in technology and really driving USDC growth.

The partnership around USYC is really important. When we acquired the product and then recently relaunched it, we designed it to be something that can be used as a yield collateral tool. When you look at today’s global exchanges, Binance is the largest global exchange, and there is a lot of collateral in those markets. We believe that with the arrival of institutionalization, large trading firms, asset management companies, and institutions will want to provide yield collateral, but then actually trade with USDC, so the integration of USYC as yield collateral and USDC as digital cash that can be used as relative margin in the spot market, etc., is a powerful market structure.

The fact that we are partnering with the largest exchanges in the world is really important, and we hope and expect that we will deploy this architecture in more digital asset exchanges and ultimately in major traditional clearinghouses. Earlier this year, we announced a partnership with ICE, with the goal of establishing the capability to support yield collateral like USYC, USDC as cash, and settlement, so this new 24/7, 365-day market structure, where you can seamlessly convert between tokenized yield collateral and cash, we believe is the future of financial markets, and we are obviously excited to pioneer and implement this vision with the largest digital asset exchanges in the world.

Host:

The next question comes from Pete Christiansen at Citibank. Please go ahead.

Peter Christiansen, Analyst:

Good morning. Thank you. Of course, we also want to congratulate you on a very successful IPO. It’s been a long road for you, so congratulations. Jeremy, I want to ask a question that we often receive from investors, which is trying to understand the relationship between trading volume and circulation. Clearly, trading volume is growing faster, so the question boils down to trying to understand the velocity of circulation for each token and how it relates to the overall circulation. If you could quantify that relationship for us to help us better understand, that would be very helpful. Thank you

Jeremy Allaire, Co-founder, Chairman, and CEO:

Okay, you're welcome. Thank you. Thanks again. There are a few points to note. I think you are absolutely right. The money supply, currently about $65.6 billion in USDC, relative to the transaction volume occurring on-chain, by the way, this does not include transactions happening on exchanges, which are off-chain transaction volumes, but on-chain transaction volumes. What you notice is that digital currencies like USDC have a high velocity of circulation, and I think part of the reason is that blockchain-based transactions now allow transactions to occur in fractions of a second at a fraction of a cent cost through the development of mature blockchain networks.

Therefore, the speed at which transactions occur, the ability to seamlessly move digital dollars around the world, moving them between different protocols for investment or payment, represents a higher velocity form of currency. I think just like data moves much faster than your newspaper delivery, or your video calls are much faster than a letter, the internet-native currency architecture will overall allow for a higher velocity of currency.

Now, regarding the relationship between the velocity of currency and the core stablecoin money supply, I think there is a correlation; you can see that correlation, but we also see that over the past year, transaction volume growth has outpaced stablecoin money supply growth, which I think partly reflects improvements in blockchain technology infrastructure that make moving these digital dollars faster, cheaper, and easier.

This also reflects the growth in payment utility we see in emerging and developing markets as well as peer-to-peer transactions, so I think this is a mix of various factors we are focusing on. I think from a long-term perspective, we are certainly interested in the monetary theory behind this new internet financial system, the velocity of currency, and ultimately how we consider the macro totals' impact on overall economic activity, but there is still a long way to go.

Peter Christiansen, Analyst:

This is very helpful. Then as a follow-up question, I’m curious, CPN seems to have had a good start; you’ve signed a number of new partnerships, some of which are quite well-known. I’m curious what the next milestone for CPN is as you seek growth for the network? And what do you envision the relationship between CPN and Arc to be? Thank you.

Jeremy Allaire, Co-founder, Chairman, and CEO:

Sure. That’s a great question. We are very pleased with the initial launch of CPN. As you know, we just recently launched it, and we see this as a pilot phase. We have received a lot of demand from financial institutions that want to become members and wish to participate in CPN. The first phase is primarily about activating several key high-priority corridors, so we have been able to launch four corridors: Hong Kong, Brazil, Nigeria, and Mexico. As we consider priorities from now until the end of the year, we hope to launch more corridors so that the flow of funds can work seamlessly between major developed markets and more emerging and developing markets, so this is a focus, and ensuring that we can provide ample liquidity between these corridors so that those who want to move funds through this network can do so, So the activation of the corridor is key.

We are developing many product features in response to what the market is telling us they need. One thing we have found is that the number of institutions wanting to join, integrate, and activate on the network exceeds our capacity to onboard them. Therefore, we are creating a self-service product dashboard to provide these institutions with self-service tools for configuring their workflow processes. These key product investments are crucial, and we hope to bring in a large number of new members. Clearly, our ultimate goal is to have thousands of members join CPN and participate in various payment processes.

Regarding the second follow-up question related to Arc, we do see Arc playing a very important role in CPN. Arc is designed as a blockchain specifically built for stablecoin finance, payments, foreign exchange, and capital markets. You will see in the white paper we recently published on our website that Arc itself will include a native foreign exchange engine and foreign exchange platform. Arc will include configurable privacy and selective confidential transfers, which are very important features for the flow of funds between financial institutions, and then obviously a direct security and gas fee model. All of this is very attractive for the content we are building for Arc, and we certainly hope that many financial institutions implementing and integrating Arc will use the Arc network as a key backbone for their payment and financial applications.

Host:

The next question comes from Ken Worthington at JP Morgan. Please go ahead.

Analyst Kenneth Worthington:

Hello, good morning, thank you for taking my question. I want to follow up on the payment business. Payment opportunities seem to be developing rapidly. You launched CPN, Coinbase announced Shopify and is building on the Coinbase Commerce platform. To what extent are these networks complementary rather than competitive? Ultimately, is it important for Circle to become the dominant payment network? Or is it better to be one of many networks as long as these networks focus on leveraging USDC?

CFO Jeremy Fox-Geen:

Thank you, Ken, that's a great question. There are several aspects to this. First, USDC as a stablecoin network is a market-neutral infrastructure on which many different types of companies are building, whether they are capital market firms, trading companies, exchanges, brokerage platforms, neobanks, traditional banks, payment service providers, and there are a large number of companies, including networks like Visa and Mastercard, that are also increasing their use of stablecoins, particularly USDC. Therefore, we expect many different payment networks and many different capital market exchanges, etc., to build on our stablecoin market infrastructure. We believe this is very valuable in terms of growing use cases and growing distribution. This is also very valuable in promoting the adoption of other technology protocols and services from which we can also profit. Overall, we have a big tent mentality, and we want to see many different types of companies succeed

Secondly, it's great that when Shopify launched its USDC payment acceptance service, they used Coinbase's products to achieve this. This is exactly what we want to see from partners like Coinbase. We want to see people building and integrating USDC into business processes and other types of applications.

Therefore, when Shopify merchants can accept USDC, it increases the utility of the stablecoin network. This means that hundreds of millions of Binance users or 100 million new bank users with digital wallets, or users around the world using various digital wallet products that support USDC, now have something to use and trade. This adds network value for Circle and expands utility, which is part of our competitive moat, expanding utility through developers integrating and deploying in different ways.

I also want to say that overall, we see tremendous demand and acceleration from companies in the payments industry that are building infrastructure to support payments for various businesses. Just in the past few weeks, we announced partnerships with Fiserv, FIS, CorPay, and Matera, which provide core infrastructure, including payment infrastructure, for thousands of banks and financial institutions, and they are integrating our technology and USDC, which is really amazing. I think this represents that there will be many different networks and many different distribution points for applications in the payments space.

Clearly, CPN is a very important initiative for us, and we hope it becomes a very successful universal on-chain payment network. We believe that the model we propose through CPN will ultimately be very attractive to financial institutions and the customers they serve.

Analyst Kenneth Worthington:

Okay. Great. Thank you. And regarding Circle's IPO, clearly there has been tremendous success here. You now have a very valuable currency. What are your thoughts on leveraging stock value to drive additional shareholder value in various ways? Is there an opportunity...

CFO Jeremy Fox-Geen:

Yes, I can comment on that. First, almost everything we do is a result of organic product development. We are a technology company. We are a software-driven technology company, and we love to build, we love to innovate, but we do occasionally find teams, intellectual property, and complementary technologies that we really want to add to our portfolio. In fact, this morning, alongside the announcement of Arc, we announced a small acquisition of a team and intellectual property that is very important in the next-generation stablecoin financial blockchain. This is an example of why we do this.

Earlier this year, we acquired another company that had a team and core intellectual property around blockchain privacy and confidentiality. So we do see opportunities for acquisitions using our currency. But we are cautious and thoughtful, and I think our strategy is not to try to make large, complex acquisitions to parallel additional business lines with what we are doing I believe we take a full-stack integrated platform approach to what we do. Therefore, we want to focus only on things that clearly meet product requirements. We currently have a lot of organic development underway, and we are excited to achieve these goals.

Analyst Kenneth Worthington:

That's great. Thank you very much.

Host:

The next question comes from Owen Lau of Oppenheimer. Please go ahead.

Analyst Owen Lau:

Good morning, and thank you for answering my question. First, congratulations on this quarter's performance and on a successful IPO. My question is, can you talk about the adoption of USDC in the remittance space? I know you have partnerships with some remittance companies, but some companies are also considering creating their own stablecoins. How do you assess the adoption in this area? Is there a way to quantify USDC's penetration rate so far? Thank you very much.

Co-founder, Chairman, and CEO Jeremy Allaire:

That's a great question. We do continue to see demand for remittances. Remittances include transfers between family members or individuals, but there are also many B2B remittances, which are companies that have operations overseas and need to send funds back to the U.S., Asia, or Europe, which is more like a flow of funds. We are seeing rapid growth in this type of cross-border capital flow. In this use case, we have more and more partnerships going live. This quarter, we have clearly seen several well-known cross-border fintech companies expand their collaboration with USDC, including Remitly, MoneyGram, and Zepz, all of which are companies with large operations.

The main use case for CPN itself is remittances, including consumer-to-consumer and B2B remittances. We see this as the first major use case on the Circle payment network. I would also say that we are looking at some indirect indicators, such as peer-to-peer capital flows in different markets around the world. We monitor these peer-to-peer capital flows through various websites that provide relevant data. Over the past year, our presence in these peer-to-peer capital flows has significantly increased.

Regarding general questions about other stablecoins, I think the key to understand is that what makes a stablecoin network perform well in remittances is the liquidity of that stablecoin around the world. Through primary and secondary liquidity, we have been able to create a massive liquidity network. What does this mean? It means that if I hold USDC and send it to someone in Brazil, it is possible to transfer it quickly and cheaply into a Brazilian bank account.

Around the world, there are companies that support the inflow and outflow of USDC. We have built a liquidity network that allows people to seamlessly transfer value in and out between different currencies, electronic money systems, and banking systems. This liquidity network is the result of years of collaboration with regional banks, global banks, payment service providers, etc., and it is indeed very difficult to replicate. Simply having a token does not really solve the issues of final delivery of funds, settlement of funds, and liquidity with various parts of the global financial system

Analyst Owen Lau:

Understood, very helpful. As a follow-up question, could you elaborate on your partnership with OKX? OKX is also a very large exchange in Asia. What are the economic arrangements? How does this deal differ from others (like Binance and Coinbase)? Thank you very much.

Co-founder, Chairman, and CEO Jeremy Allaire:

Of course. First, I want to say that the digital asset market is a key market for us. It continues to grow and is very large. There are many companies, including regional and global ones, that are significant in this space. Our participation in these markets has increased significantly. Since the beginning of 2024, our share of trading volume in the spot markets of major exchanges has grown tenfold, and we are indeed focused on this. I believe that as compliance and regulatory integration becomes more important, and having trusted and secure stablecoins becomes essential, we find more opportunities to collaborate with the largest exchanges.

Coinbase has a first-mover advantage. They were the first large exchange to really bet on USDC, which has been great for them. We have established a partnership with Binance and expanded our collaboration with them, as they are the largest exchange in the world. Returning to your question about OKX, we are very excited about the prospects of expanding our relationship with OKX. We do not disclose the important terms or commercial terms of specific deals, but we can say that they are adopting Circle wallet technology, and we are providing them with integration with our core Circle Mint infrastructure so that they can offer the best liquidity experience for USDC to the institutions coming to their platform.

They have 60 million users. This will help promote USDC to these 60 million users, further increasing the value and impact of our network and the utility of USDC. We hope to collaborate more with OKX as they are also becoming a more regulated participant, regulated in Europe. They have publicly talked about launching in the U.S., and they are a very reputable company with a global business, which is an important extension of our strategy in the digital asset market.

Analyst Owen Lau:

Thank you very much.

Host:

The next question comes from John Todaro at Needham. Please go ahead.

John Todaro, Analyst:

Hello everyone. Thank you for taking my question, and congratulations on your excellent performance this quarter and the launch of Arc. The first question is related to Arc. From the perspective of node operator validators, what is Arc's distribution goal? How do you ensure that gas fees remain low? Then I have a follow-up question.

Jeremy Allaire, Co-founder, Chairman, and CEO:

Of course. There are several aspects. First, I strongly recommend that you read the white paper published this morning, where we discuss some related issues. We have designed a novel fee mechanism for Arc that will ensure transaction costs are predictable and low, with these transactions priced in USDC. I believe that as we enter the public testnet phase, there will be more information about the fee market mechanism. We have adopted a novel approach in this regard. If you are a financial institution or a commercial company, having low and predictable fees is very important, and it is crucial that these fees can be paid with real digital cash.

In terms of distribution, we ultimately hope that Arc will be operated by a fairly large distributed network of professional validators. We focus on vetted professional validators who can meet the operational security and compliance expectations required to operate this critical infrastructure. We hope this network is highly distributed geographically. We also want it to be distributed among major institutions, and I believe this presents a huge opportunity for existing large companies in the fields of financial market infrastructure, financial institutions, and validator infrastructure. We have a complete vision and market strategy in this regard. We are still in the early stages of construction, and the white paper also addresses our thoughts on this evolution.

John Todaro, Analyst:

Great. Thank you, Jeremy. Regarding the GENIUS Act, if you look at the circulating supply growth of Tether, it seems to have remained basically flat since July 27. Meanwhile, USDC has been growing continuously since then. You mentioned earlier seeing some momentum or impact from the GENIUS Act; is that what you were implying? Do you think this is a result of the GENIUS Act, or have we not really seen the impact in this regard yet?

Jeremy Allaire, Co-founder, Chairman, and CEO:

It is difficult to directly associate the rapid growth of USDC over the past month and a half with specific legislative outcomes. I think it can be broadly said that the awareness of USDC is increasing globally. The recognition of USDC as a product specifically built for the content represented by the GENIUS Act is interesting, but it is hard to know whether this has influenced user preferences.

However, my previous comments were more about commercial participation. Since Circle's IPO and the eventual passage of the GENIUS Act into law, we have seen a significant number of inquiries from financial institutions across various sectors of the financial industry, major tech companies, and large enterprises, coming from all regions of the world that we cover in our business. I believe this is a catalytic moment for mainstream institutions, allowing them to say, "Okay, now I can participate, now I can build, now I can use this technology." The regulatory environment in the U.S. for financial institutions participating in this space has also loosened, which is clearly beneficial.

We are seeing a significant increase in current business opportunities, which is very exciting. I think this is exactly what we talked about when communicating with the market during the IPO process; we believe the GENIUS Act will be an important catalytic moment and a driving force for the adoption of our business. Now we need to seize these opportunities and ensure we build the right products and services for these partners, with the key being to establish win-win economic relationships that allow these clients to provide value to their customers They can achieve economic growth, and we can achieve economic growth as well; this is the fundamental concept of our collaboration with global companies.

Jeremy Fox-Geen, Chief Financial Officer:

I would like to add one point. The GENIUS Act is clearly a significant catalytic event that has generated interest among major financial institutions across various financial activities. However, I want to express a cautious viewpoint: while this is absolutely necessary for the accelerated growth of USDC and the internet financial system, financial services companies, especially the largest ones, typically require time to integrate new technologies and launch them to customers. The huge advantage of our position is that they are exploring deep integration with us, which will bring stickiness over time, but at the same time, the speed of their rollout will depend on their own internal progress.

Jeremy Allaire, Co-founder, Chairman, and CEO:

Absolutely correct.

Host:

The next question comes from Jeff Cantwell of Seaport Research. Please go ahead.

Jeff Cantwell, Analyst:

Thank you. First, congratulations on the successful IPO. Regarding the passage of the GENIUS Act, Jeremy, for you and many others in the crypto industry, reaching this point may have been a long journey. So I want to congratulate you and everyone who helped achieve this goal.

I would like to follow up on the previous question and talk about what you have seen since the passage of the GENIUS Act. It seems that your USDC circulation in the second quarter was $61 billion, and now in August, it is $65 billion, so it does appear that demand is increasing. I hope you can provide some information on what you have observed in the weeks since the passage of the GENIUS Act. Is this more domestic or international growth? Can you elaborate on that?

I also want to ask how you view the future growth of USDC. You mentioned a 40% compound annual growth rate; how would you describe the sources of expected growth? Can you categorize what you believe are the incremental opportunities for USDC? Thank you.

Jeremy Allaire, Co-founder, Chairman, and CEO:

Okay, I will answer part of this question, and Jeremy Fox-Geen will add some insights. Yes, regarding post-GENIUS demand, as we just discussed, I primarily attribute it to institutional interest in building on our stablecoin network and the interest of institutions in collaborating with Circle. As Jeremy Fox-Geen just mentioned, these institutions need time to establish relationships, implement products, launch products, and scale them.

I believe the recent growth reflects a global environment that is signaling a green light for the use of stablecoins. This is undoubtedly driven by increased activity in the digital asset market, but I think, broadly speaking, it sends a signal to the market: stablecoins are now a tool similar to digital cash that can be utilized. This will be interesting, and I know this relates to your other question about growth. Clearly, with the recent acceleration, we have seen a 90% year-over-year growth and a 49% growth year-to-date

But in terms of considering future development, I know Jeremy Fox-Geen has some thoughts on this, as well as our general philosophy on it, because this is not a simple guidance issue, so we have taken this approach.

Jeremy Fox-Geen, Chief Financial Officer:

Thank you, Jeremy. Let me talk about how we view this - you mentioned the 40% figure we released, and how we perceive that number. As I mentioned in my remarks, the growth in USDC issuance is, in many ways, a reflection of the output of the entire economy. The digital asset market provides a launch use case for stablecoins, representing the largest part of this economy today. But as I believe we have been discussing throughout this call, we see interest and adoption of these new monetary technologies accelerating across every major financial services vertical, and these new technologies can bring significant advantages. This is still in a very early stage. We are at the beginning of building an internet financial system, and these new financial service technologies have years, if not decades, of growth potential ahead.

Specifically regarding guidance, an increasing number of third-party research firms and financial industry analysts are publishing studies on the growth of stablecoins, and they are seeing not only the prospects I mentioned but also multi-year compound annual growth rates, which range from a low-end compound annual growth rate of 25% to a high-end of over 90%. From our reading, the current best median is about a 60% compound annual growth rate. We are very confident in the benefits of these new technologies.

In terms of guidance, our core model runs a series of scenarios that allow us to manage the business in an uncertain environment. But our core model shows a 40% compound annual growth rate. If we can achieve this in USDC growth, we believe it will provide compelling financial returns for investors.

Jeff Cantwell, Analyst:

Understood. Great, thank you. As a follow-up question, one of the questions that is often asked about your company post-IPO that needs clarification is, where does the on-chain transaction volume come from? Can you elaborate on this? You just reported $5.9 trillion in on-chain transaction volume. Perhaps you could discuss the use cases and even the geographical sources of the transactions? I think a lot of the focus is because public investors are still trying to better understand the crypto world, while the fiat world is obviously more familiar in the U.S. So can you tell us how the $5.9 trillion was generated? That would be very helpful. Thank you.

Jeremy Allaire, Co-founder, Chairman, and CEO:

I can speak to that. I think you know that public blockchain data does not include geographical IP addresses and such information. But there are good heuristic methods to look at this data. In fact, I believe there are some excellent third-party research firms that specialize in blockchain data and blockchain analysis, and we look at that data and other data sources. I can say with certainty that this is highly distributed geographically. USDC has significant traffic all around the world, including Europe, Asia, emerging and developing markets, Latin America, the Middle East, Africa, and Southeast Asia So the geographical distribution is very broad. While the United States is important, it does not dominate. We see this geographical distribution in the data we can access.

We can identify specific USDC activities, such as USDC moving between exchanges or super wallets, which we often associate with investment activities, savings activities, and payment activities. For example, we know that using stablecoins for peer-to-peer payments in emerging markets is an important use case. However, these peer-to-peer payments are mostly intermediated through large wallets connected to major financial super applications, such as Coinbase products or Binance products, which people in these markets use not only for trading and investing but also for saving to earn yields and P2P payments.

Once USDC enters one of these large platforms, we cannot accurately track all the internal flows and what people are doing, but these are some comments I can provide. Jeremy, do you want to add anything?

Jeremy Fox-Geen, Chief Financial Officer:

Yes, I want to add a point about what this means from a macro perspective. In today's world, every currency flow use case—such as consumer payments through credit card networks, remittances, international currency transfers via SWIFT—each use case actually has a different technology delivery stack. With the development of the internet, we have seen the emergence of the first universal architecture for currency flows.

So on-chain transactions encompass the currency flows of all financial service use cases, which is a fundamental difference compared to existing systems, and certainly a huge difference. What does this mean? When we consider these use cases, for example, Visa processes over $10 trillion in transaction volume annually through its consumer business and business-to-business track. This is a cited figure. But let's not forget that, for example, JP Morgan processes over $10 trillion daily in total currency flows and total currency settlements, as well as other use cases. All of this is interwoven in the on-chain transactions of stablecoins. As Jeremy mentioned, it is difficult to break down all these different currency uses, but we should not forget that all these currency use cases are reflected in these numbers.

Host:

The next question comes from James Yaro at Goldman Sachs. Please go ahead.

James Yaro, Analyst:

Good morning, thank you for taking my question. First, I would like to ask about the prospects for non-USD stablecoins, and how you see these stablecoins as necessary for facilitating the growth of cross-border payment stablecoins, thereby promoting the development of CPN? Then I would like to understand to what extent you plan to promote this through EURC?

Jeremy Allaire, Co-founder, Chairman, and CEO:

Thank you, James, that's a good question. In the long term, we are very optimistic that almost every major country in the world will have a good stablecoin policy framework, and we will see the widespread adoption of high-quality regulated payment stablecoins. We believe the GENIUS Act is actually driving this process. We see legislators and governments around the world now genuinely competing to formulate their stablecoin policies Therefore, we do look forward to this popularization.

We hope to collaborate with these non-USD stablecoins. We have obviously issued EURC, which has performed well. But we want to work with these non-USD stablecoins because on-chain currency is a more effective and efficient currency. It is programmable currency. From a cross-border perspective, if you can have 7×24×365 continuous settlement and atomic swap PVP transactions, that is a very powerful building block. This is also one of the reasons we are building such an engine into our own core blockchain network, Arc, and we hope to see it mature because we believe it will be very important as a programmable building block for commercial trade and various types of capital market activities.

Now, although all of this is not yet fully mature, we believe it will mature, but that does not necessarily hinder the growth of stablecoin usage in cross-border settlements. The CPN itself was designed from the beginning as a foreign exchange model to connect stablecoins with local currencies, liquidity, and local electronic currency tracks. Therefore, a person remitting from Portugal to Brazil may hold EURC or USDC on one side of the transaction, while on the other side, essentially what we call a BFI recipient, who has USDC liquidity against the local Brazilian real, can effectively price based on existing market prices, or they can compete on pricing, and then they can effectively use USDC's instant credit to initiate near real-time payment for the final bank transfer. So there are ways to do this. There are also ways to make the on-chain foreign exchange market essentially an on-chain foreign exchange market, where the market and pricing are completed, but the fulfillment of the currency aspect is post-trade, which is also a structure we expect to see more development in. But again, in the long term, we are very encouraged and hope to see more of what we call local partner stablecoins. We want to see them issued on the Arc blockchain. We want to support them on CPN. We want to support them in Circle Mint and our wallets, and we want to see a lot of stablecoinization in what we do, as we believe this is part of building an internet financial system.

James Yaro, Analyst:

Very clear. On another topic, perhaps you could talk about the opportunities with Circle Gateway, and how this differs from or integrates with Circle CCTP?

Jeremy Allaire, Co-founder, Chairman, and CEO:

Certainly. Circle Gateway and Circle CCTP address similar but slightly different problems. CCTP is a lower-level protocol. It is a low-level protocol that allows USDC to be settled across multiple different blockchains. It is used quite extensively in today's cross-chain USDC. The last time I checked, I believe over 80% of cross-chain USDC operates through CCTP, and we have a second version that is also growing continuously. So this allows— in a sense, it is at a lower level, and it does not address what we see as the user experience issue

In the world of CCTP, we find that there are many wallets, whether institutional wallets or consumer wallets, you will still encounter situations like this: you need to know on which chains you have USDC, and which chains you want to transfer USDC to, so user experience is a barrier. Therefore, Circle Gateway is actually designed as an abstraction layer to eliminate this user experience barrier. So users, which could be institutions or individuals, only see their USDC balance.

So they say, I have 10,000 USDC, and they can basically spend that balance on any supported chain in less than a second, so you can say, hey, I have USDC, what kind of wallet do you have or give me a QR code or give me an address, and I can seamlessly spend to those addresses. So it really simplifies the user experience. This is part of our goal to make cryptocurrency disappear into the background and make this a smoother experience. Therefore, Circle Gateway is a different architecture to achieve this goal, which is something we primarily launch to the market through developers integrating it into products and services, just like CCTP version 2, which also provides new monetization opportunities for Circle. So the simplified user experience is a feature. We want to monetize it while also providing a better experience for those using these products.

Host:

Your next question comes from Deutsche Bank's Brian Bedell. Please go ahead.

Brian Bedell, Analyst:

Great. Thank you. Good morning. Thank you for answering my question, and congratulations on the tremendous success of the IPO. Perhaps this is a big-picture question about the long-term growth of USDC in the industry and the desire to make it a winner-takes-all and increase the scale and network effects of USDC. I want to ask, Jeremy, how do you feel about the interest in partnering with more institutions? If that means higher distribution costs and lower reserve profit margins, do you think it is attractive to do so to grow USDC, or do you really believe that reserve profit margins should be maintained at least around 30%?

Jeremy Allaire, Co-founder, Chairman, and CEO:

I can answer part of that, and perhaps Jeremy Fox-Geen can answer another part. First, we have a strong interest in developing partnerships that can grow our network. I want to remind everyone that we have many different types of partnerships. Partnerships with digital wallets are completely different from partnerships with merchant acquirers, which are again different from partnerships with large exchanges that have hundreds of millions of users. We work with many different types of partners, each with its unique transaction formats.

We have many different transaction manuals to execute, and I think it's overly simplistic to think that every transaction must give up reserve income; that's not the case. We focus on partnerships that: A, focus on providing value to customers, i.e., how they grow value for customers through this partnership; B, this is a win-win growth-oriented model, and we want to establish economic relationships that incentivize growth so that we see partnerships actually impact transaction speed, market share transfer, or the growth of USDC itself

We are truly focused on these win-win growth-oriented relationships. It's not about launching a card, providing a rate sheet, and then doing this kind of thing. We want to work with those who want to build and grow with us, and that is our screening criterion, which I believe is effective. Jeremy, perhaps you can comment more on how we view this in relation to our RLDC margins and outlook.

Jeremy Fox-Geen, Chief Financial Officer:

Thank you, Jeremy. I will expand on that and then talk about the numbers. It is important to understand the strength and breadth of our platform capabilities, combined with our position as a market-neutral infrastructure, encourages more participants and even allows fierce competitors to build and integrate on our platform. Our partners then bring the benefits of these new currency technologies to their customers, allowing customers to benefit, build their businesses, and grow the use and adoption of USDC, which reinforces our network through more capabilities, more users, and more distribution. This is a network business with network effects, and as the network strengthens, our position is also enhanced. This is an important context for our future RLDC margin outlook.

We are currently not guiding beyond 2025. However, I believe there are three factors that provide relatively strong tailwinds for this margin in the long term. The first is the increasing power brought by network effects, which is exactly what I just talked about. We see this in our business discussions, and we also know that it is important that the growth of USDC held within potentially incentivized partner infrastructures will also lead to broader growth of USDC held outside of partner infrastructures in the ecosystem. We see the increasing power brought by network effects. That is the first point. Second, we see the growth of USDC held within the Circle platform infrastructure. As I mentioned earlier, we have a broad, feature-rich platform, and our position as market-neutral infrastructure will only allow more people to build on our platform over time. This is important, and for USDC held within our platform infrastructure, we have greater economic flexibility.

Finally, our high-margin other income is also growing, primarily because today we make money from the stock of funds on the network. Over time, through the products we have already launched and started talking about, even though they are still in their infancy today, we will generate revenue from certain cross-network infrastructure traffic, where we can add value-added services for the benefit of users. We see this other income growing over time, and these are very high-margin revenues that provide long-term support for our overall margins. Together, these three factors provide what we believe is a relatively strong long-term support for our RLDC margins.

Host:

The Q&A session has come to an end. I will now hand the call over to John Andrews for closing remarks

John Andrews, Vice President of Capital Markets and Investor Relations:

Great, Tiffany. Thank you. I apologize to a few friends in line who couldn't ask their questions, but our time is limited, and we are happy to follow up with everyone. You know how to contact us through the investor website at circle.com. Have a great day, everyone