CIRCLE (Minutes): Continue to expand usage scenarios and distribution channels
The following are the$Circle(CRCL.US) FY25 Q2 earnings call minutes, for earnings interpretation please refer to 《Circle: Making and Losing Money is a Minor Matter, Ecosystem is the Main Artery!》
I. Review of Core Financial Information
(1) Guidance and Future Outlook:
◦ The company does not provide short-term quarterly guidance but offers full-year key metrics outlook. It is expected that the full-year revenue for 2025 will exceed previous expectations, with a core model compound annual growth rate of 40% for USDC.
◦ Other revenue for 2025 is expected to be USD 75-85 million, mainly from subscription and service revenue from blockchain network partnerships, as well as growing transaction revenue.
◦ The RLDC gross margin for 2025 is expected to be 36%-38%, with full-year operating expenses growing 20%-24%, a rate lower than revenue growth.
◦ Future focus will be on expanding the number of payment channels for Circle Payments Network (CPN), Arc mainnet and application scenarios, and cooperation with large financial institutions and global enterprises.
(2) Capital Expenditure and Personnel Plan
◦ Specific capital expenditure figures and personnel adjustment plans were not disclosed, but it was stated that there will be continued investment in platform construction, feature expansion, and global partnerships.
◦ Emphasis on enhancing product capabilities through in-house development and small-scale technology acquisitions.
II. Detailed Content of the Earnings Call
2.1 Executive Statements of Core Information
1. The company continued to achieve strong growth this quarter. The circulation of USDC reached USD 61.3 billion at the end of the quarter, an increase of approximately 90% year-on-year, and reached USD 65.2 billion on August 10, indicating that the growth momentum is still accelerating. Transaction volume also achieved strong growth, with a growth rate faster than the circulation growth rate.
2. In terms of business expansion, we officially launched the Circle Payments Network (CPN), a payment network infrastructure that global institutions can directly access. Currently, four cross-border channels have been opened in Hong Kong, Brazil, Nigeria, and Mexico, covering services such as instant settlement, foreign exchange conversion, and global transfers. More than 100 institutions have expressed interest in joining. More channels will be expanded in the coming quarters, including developed and emerging markets.
3. Released the next-generation Arc Layer-1 blockchain, designed for financial institutions and enterprise applications, using USDC as the native gas fee currency. Arc features enterprise-grade performance, deterministic settlement, optional privacy transmission, and built-in foreign exchange engine, and will be deeply integrated with the company's full product line. Arc will become an important underlying infrastructure for CPN.
4. In terms of partnerships, the company continues to deepen cooperation with major global institutions such as Binance, OKX, Visa, Mastercard, Stripe, Shopify, and Coinbase. Key points include:
• Launching a USYC yield-bearing stablecoin collaboration with Binance, using it as yield-bearing collateral for trading and settlement on the world's largest exchange.
• Integrating Circle Wallet and Circle Mint technology with OKX to provide the best USDC liquidity experience for its 60 million users.
• Collaborating with payment network giants Visa and Mastercard to expand merchant acceptance of USDC payments.
• Partnering with large payment infrastructure providers such as Fiserv, FIS, CorPay, and Materra to integrate USDC into the core products of tens of thousands of financial institutions.
• In terms of business revenue structure, the company is diversifying transaction fee models, including CPN cross-border settlement fees, Arc gas fees, and USYC yield-bearing features. These models will become important components of future revenue growth.
• In terms of regulations and policies, the passage of the GENIUS Act has significantly increased the willingness of financial institutions, technology companies, and large enterprises to cooperate with Circle globally, especially in the United States. Short-term growth is mainly reflected as market signal effects, while long-term growth will depend on the pace of institutional implementation and integration.
• Looking ahead, the company will continue to invest in platform construction, feature expansion, and global partnerships, not ruling out enhancing product capabilities through in-house development and small-scale technology acquisitions.
2.2 Q&A Session
Q: Regarding Arc, will gas fees become the first step in the revenue model, perhaps the first step in shifting transaction fees away from transaction participants, etc.? Will Arc and gas fees become the basis for broader USDC transaction fees?
A: Arc aims to support financial, payment, foreign exchange, and capital market applications for all stablecoins, particularly for mainstream regulated financial institutions looking to build financial products and services on-chain. It is expected that a large number of transactions will migrate to networks like Arc. Gas fees denominated in USDC can become a source of revenue. More details will be disclosed as it enters the testnet and eventually goes live on the mainnet.
Additionally, the company already has multiple sources of transaction fee revenue, including CPN expansion, Circle Mint premium features, USYC yield token features, etc., all of which include transaction fee models. Arc's basic gas fee model will also be denominated in USDC.
Q: Can you elaborate on the cooperation with Binance on USYC, not just USDC?
A: The cooperation with Binance covers both USDC and USYC. For USDC, Binance is continuously adopting and deeply integrating Circle Wallet technology to facilitate the use of USDC on its platform.
USYC is designed as a yield-bearing collateral tool suitable for large trading companies, asset management companies, and institutions, allowing them to use USDC as cash for margin and spot trading while holding yield-bearing collateral assets.
This is a powerful market structure that will first be implemented on the world's largest exchange, Binance, and is expected to expand to more digital asset exchanges and major traditional clearinghouses (such as ICE cooperation). This structure enables 24/7/365 instant settlement and seamless switching between yield-bearing collateral and cash.
Q: How to understand the relationship between transaction volume and circulation volume?
A: Currently, the stock of USDC is approximately USD 65.6 billion (excluding off-chain transaction volume within exchanges), and its on-chain transaction volume reflects a very high currency circulation speed. This is due to the fast, low-cost, and globally seamless transfer capabilities of blockchain, as well as the convenience of using it for investment or payment across different protocols.
Transaction volume growth is faster than currency supply growth, partly due to efficiency improvements brought by infrastructure upgrades and the growing demand for payments in emerging markets, developing markets, and P2P scenarios. The internet-native currency architecture naturally supports higher circulation speeds.
Q: What channels will CPN open next? What is its relationship with Arc?
A: CPN has opened four channels in Hong Kong, Brazil, Nigeria, and Mexico, and will expand more developed and emerging market channels by the end of the year, ensuring sufficient liquidity.
Arc will be one of the underlying infrastructures of CPN, providing native foreign exchange engine, optional privacy transmission, and deterministic settlement functions to meet the payment and foreign exchange business needs of institutions.
Q: In the competition of payment networks, will the company seek to dominate?
A: The company adopts a market-neutral strategy, welcoming multiple payment networks to develop on the USDC basis to expand usage scenarios and distribution channels. For example, Shopify supports USDC payments through Coinbase, and cooperation with Fiserv, FIS, CorPay, Materra, etc., integrates USDC into the systems of tens of thousands of financial institutions.
Q: How is the adoption of USDC in cross-border remittances?
A: Cross-border remittances are the first major use case for CPN, including C2C and B2B transfers. This quarter, cooperation with cross-border fintech companies such as Remitly, MoneyGram, and Zepps was expanded. The global liquidity network allows USDC to be exchanged into local currency at low cost and quickly, and enter bank accounts or electronic wallets. The establishment of this network took years, and cooperation with global and regional banks and payment service providers is one of the core competitive advantages.
Q: How does the cooperation with OKX differ from Binance and Coinbase?
A: OKX will adopt Circle Wallet technology and integrate Circle Mint to provide the best USDC liquidity experience for its 60 million users. This will significantly increase the use of USDC on OKX and support OKX's expansion in European compliance and the US market.
Q: Arc's decentralization goal for verification nodes and gas fee rate control mechanism?
A: Arc will be run by globally distributed, audited professional verification nodes to ensure security and compliance. The new fee mechanism guarantees low and predictable transaction costs, paid in USDC, facilitating accounting for enterprises and financial institutions.
Q: Impact of GENIUS Act on USDC growth?
A: After the passage of the act, cooperation interest from global financial institutions, technology companies, and large enterprises has significantly increased, especially after the improvement of the US regulatory environment, institutions are more willing to adopt stablecoin technology. In the short term, the direct impact on circulation volume is limited, but it has driven more business opportunities and cooperation. Long-term growth will depend on the speed of institutional integration and implementation.
Q: What are the main drivers of future USDC growth?
A: The digital asset market remains the largest use case, but interest in payment, foreign exchange, and capital markets is rapidly rising. Third-party forecasts predict a stablecoin compound annual growth rate between 25%-90%, with a median of about 60%. The company's core model is 40%, believing this level can bring attractive returns.
Q: Source distribution of on-chain transaction volume?
A: The geographical distribution of transaction volume is highly dispersed, with the US not being the main market. A large number of transactions come from emerging market P2P payments in Europe, Asia, Latin America, the Middle East, Africa, and Southeast Asia, as well as investment, savings, and payment activities within global large trading platforms (such as Coinbase, Binance). After USDC enters these platforms, users will use it for various purposes, including yield storage and peer-to-peer transfers.
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