Circle Internet Aktie

All right. Hi, everyone. Good morning. My name is Gautam Chhugani. I cover digital assets at Bernstein. It's my pleasure to welcome Jeremy.

I mean, stablecoins have been a big part of the story last year and significantly with this new agentic economy, we've seen stablecoins kind of gain prominence. So Jeremy, we've been -- we've been -- Circle has been around for a while. How do you see sort of the vision evolving over the last few years and sort of going forward?

Yes. Well, thanks for having me here this morning. A couple of things. I think just maybe rooting the answer in a little bit of kind of how we thought about really overall, the strategy of the company from early on. I think we had a few premises very early, I think, going back 13 years, in fact. So one was that over time, we would be able to establish a protocol for dollars on the Internet and that these network operating systems, what we call blockchain network operating systems would mature to a point where effectively, the marginal cost of storing and moving value would approach 0 and you'd be able to have very high velocity money that operated on these networks.

That presumes that the technology would evolve to the point where you could do that, that presumes that this would actually become defined legally as money in the financial system and sort of be integrated and interoperable with the existing world. Fast forward 10 years, so that gets you into your last few years comment. Really, what we've seen is literally over the last few years, all those things have click, click, have happened, right?

So we now are sort of entering the fourth generation of blockchain networks, which we'll come back to as we talk about Arc and other things as well. And these networks and this infrastructure is being deemed as acceptable for financial market participants, for banks, for capital markets, for fintechs, payments firms, et cetera. We have legally defined money through major legislation all around the world, not just in the U.S. And we see the performance of these networks as well, a monetary base of something approaching $80 billion, seeing something close to $15 trillion of on-chain transaction volume where transactions now are able to be priced at a tiny fraction of a cent and can settle in milliseconds, a few hundred milliseconds.

So really have seen that first piece kind of happen. And most of the world is just figuring that out. The most of the world is just figuring out, well, how do I plug into this? How do I use this? How does this change how I move value, store value, et cetera.

Now what's interesting is that what actually inspired me in starting the company was -- my background was in other Internet infrastructure, not in the financial world and had worked on a lot of software platform development tools and things like that. And so the really exciting opportunity was this idea of programmable money and this idea that you could have machines, autonomous machines, software machines on these networks, on the Internet providing a way to automate the all forms of kind of financial market primitives in exchange of value.

That, in the last few years has also matured and it's matured in 2 fundamental ways. The first is that these network computers now can efficiently deploy smart contracts and code and the kind of the hardening of that is becoming real. So we have the ability to have machine automated money in very, very different ways.

And then the other is this collision with and kind of compounding with agentic and AI. And so we're -- as we look forward, which I think is at the heart of the question is, we're moving now into a world where a greater and greater amount of the labor unit economics of what happens in the economy is going to shift into AI and AI-based automation systems, and that is going to shift into machine executed contracts, machine executed value exchange and to these very specific networks and to these very specific forms of money. And so -- the early thesis is sort of being realized.

And I think the concept that we have is that once you enter into this sort of autonomous software programmable money universe that the utility value for money increases pretty dramatically as well. And so the applications in the financial realm become quite different than anything we've ever seen. We're seeing that every day, we're seeing new kind of new kinds of opportunities emerge at the retail and institutional level based on that as well.

And when you started -- when stablecoin started and the first product market fit was around digital assets. And then part of the challenge was to kind of move beyond digital assets into more consumer-facing or enterprise-facing use cases, particularly in the sort of the cross-border realm. That's where sort of it made a lot of sense. How do you see that journey evolving while also at the same time, you're seeing this sort of new layer around agentic?

Yes. I mean a few things. So as you said, right, our conception of this was that this was going to be general purpose, general architecture money, programmable money and that the applications of this were every application of money in the world. And I still very much believe that. And if we look at the utility of something like USDC and blockchain networks today, they really do span an incredible gamut of use cases.

At one end of the spectrum, we now have AI agents that are paying a fraction of $0.01 to consume intelligence from another agent that's providing a service to it and executing that in real time. That's not possible in the existing financial system. That dials up to -- we are seeing more and more retail platforms, more and more payout platforms, treasury management applications. Virtually every major fintech in the world is building on or integrating with USDC and using this in different use cases.

Now we also are seeing more and more traditional financial market infrastructure companies, large clearing firms, large global custodians, capital markets, infrastructure companies, derivatives platforms, global banks, all beginning to plug into this infrastructure. And then obviously, something that we've talked a lot about is the value of this as a global medium of exchange and settlement layer and that's obviously driving a lot of growth in the market as a whole.

So the kind of B2B money movement being the strongest. A lot of that is emerging market driven and Asia-driven and that is really effectively in markets around the world. The businesses both want to settle fast and settle directly over the Internet. And in many cases, they actually want to hold these digital dollars as their working capital rather than their local currencies. And so those are things that we've also seen. And I think what's interesting is we talk about this a lot. Circle has very high moats. We have very strong network effects. We've been very clear about this from when we talked about it in our S-1 and post-IPO. And that is playing out.

If you're a major company and you are deciding what stablecoin network am I going to use? USDC is fundamentally the only real choice that you have. If you're real serious institution, whether it's Meta, who's using USDC for global payouts; e-commerce platforms like DoorDash, the largest and potentially most valuable private company in at least in fintech Stripe. And even just yesterday, in fact, we saw an amazing thing that I love, which is Cash App, which is the key franchise from block, launched seamless USDC payments.

So think about this. Every neobank, every digital wallet has been a walled garden, right? It's been like, hey, "I can pay you if you have Cash App or I can pay you if you have this product." But you have no way to have interoperable payments. We've always believed that USDC would be and stablecoin networks would be that interoperability layer. And so now if I'm in Latin America, and I've got a digital wallet like Nubank, I can now pay someone in the U.S. who has Cash App. If I'm a Cash App and I want to pay someone who's in Slovenia who has Revolut, I can pay them because they all speak USDC, and this is really powerful.

And so what's neat about it, too, and it gets to your question about what evolves is block is a very outstanding at delivering great user experience. They're known for delivering awesome customer experiences. They've made it invisible. There's no crypto. You don't see any crypto.

It's completely...

Your dollars are there and then you can beam them around over USDC. It magically figures out what network you're sending and receiving on. They've made it seamless. Now they're using our technology stack, which is awesome but -- and we've done a lot of work to facilitate kind of sort of having the crypto technology in the background.

So we're starting to see these kinds of things continue to click in. And I think that's exciting. A natural question we also get asked is like for all these use cases, where is the growth? Where is it going to come from? How much growth? I think we certainly see thematically that international, the international applications, the cross-border applications, the digital dollar store value utility by far, is sort of the largest segment.

And a lot of these others are all kind of starting and coming online now. But obviously, when we think about the future, we're thinking about how does this build out? And how does this form of money and this infrastructure take on a broader and broader role in the totality of the way all of the financial system operates.

And when you kind of -- in the context of, for example, Cash App going live, I mean, it's largely a U.S. distribution base. There's also this conversation around stablecoins have been useful, but outside the U.S. particularly in the context of like stablecoin-linked cards in LatAm and sort of other markets, how do you see this play out in terms of like use cases within large geographies like U.S. versus outside?

I mean I think my core view, of course, is that stablecoin money and economic operating systems like these blockchain networks are the best possible infrastructure in the world for all of finance and the financial system at large, whether it's capital markets, trading, banking, lending, payments, et cetera. Everything will get rebuilt on this infrastructure in every major market in the world.

So this is -- the U.S. is going to be a huge market for this. And if you look today at the major institutions that are plugging into this today, huge numbers of those are major U.S. institutions. So the tokenization of assets, which opens up completely new opportunities for how you face customers, how customers can interact with your investment products, the distribution of those all of those are taking place with major U.S. firms.

And so this is not a -- this is a kind of thing in the rest of the world, and it's just the U.S. is going to stick to its old legacy infrastructure that's slow and expensive and traps capital, and so on. I don't see that happening. So I do see this very broad. But we're in a transition where think about something like WhatsApp. No one in the United States use WhatsApp. Like it's just like no one used it, right? But people found its utility in emerging markets first because it was cheap, it was fast and it was better than paying their telephone companies for data.

And so it solved a real problem economically for people, and it exploded in emerging markets. And then it found its way into every market in the world. I don't know if everyone here has WhatsApp, I certainly do. But I think that product market fit comes in different forms, in different markets around the world, and it's very much the case that global markets in particular, Asian markets, Latin American markets, Middle East, Southeast Asia, all these have been fast adopters of this technology. And some of these markets are just frankly just more advanced than the United States. They move faster. They adopt technology faster, they're leapfrogging faster. And so this is this is also some of what drives that as well.

Yes. I want to get to the Circle ecosystem, the Circle stack but just addressing this consumer use case, a big use case that we've seen take off is stablecoin-linked cards. Do you think that's the sort of long -- is that sort of an interim interface that we are talking about, given the card networks have millions of acceptance networks and acceptance points. It's easier to distribute stablecoins to the consumer through cards or we're still in that phase where example of being Cash App, where it's still going to take time to abstract away the stablecoin so that people can beam money in the way you're talking about. So what do you think is the sort of long-term consumer-facing interface for stablecoins?

Yes. I mean, look, I think it's -- we're in an exciting time right now because the capabilities of these -- the operating systems for building apps with this new kind of digital money, these blockchain network operating systems are really coming into a -- into shape, whether it's things like Arc, there are other emerging platforms. But really coming into shape.

I use the example of mobile operating system, just to help make the point, which is that was a long time, it was about 15 years where we were all kind of out in the desert, believing that we had mobile but actually none of us did. Like we went through a period of Symbian phones, Palm Pilots and Blackberries and Windows phone. And it was all -- excuse my language f****ing awful. It was just really awful. And then you hit an inflection point where hardware, network speed, the quality of operating system, new user experience paradigms. All these things came together and you had this huge inflection point that made the usability of mobile radically better.

And that was, Apple lead the way, Google followed. They both executed and that entire paradigm emerged and a completely new generation of software was born that no one had even imagined was possible. Even the greatest entrepreneurs could not imagine all the things that we created. Now I think we're approaching that point in this space. I think that the developer surface, the combination of AI, agentic interfaces. So interacting through AI, and the ability to deliver, to create, craft, deliver exceptional user experiences that work with all of the crypto technology hiding in the background, it is upon us. And so the ability to deliver great user experiences for end users, is here. It's arriving.

And we're seeing -- I'm so excited about what we're seeing with developers on Arc right now. But this new generation of user experiences -- it is not going to look like Venmo and PayPal or it's not going to look like Zelle, it's not going to look like your f****ing bank app on your phone, it's going to be very, very different. And the technology will be invisible to people, and that is happening, and it's emerging right now.

So I think my view is that we're going to go through a period of accelerated consumer product innovation and that consumer -- it will be institutional as well, but consumer product innovation and the user experience that we have will be fundamentally different. So I think with that, to your question, take Visa as an example, Visa and Mastercard, but they have built, I think, extraordinary networks, right?

They have built ecosystems with very global reach, and they've executed that through stacks that reach down to terminals. They also benefit from the distribution that they now have through -- their tokenization, different token, card credential tokenization. And now what you're seeing is a marrying of fully digital money like USDC, fully digital currency settlement on their own networks.

So I'm someone who has a user with USDC. I want to dynamically generate a token that allows me to tap to pay in a real location. That credential is just USDC, a crypto credential into a card credential that allows the payment. I as the ultimate provider of that service to that consumer, I pay Visa in USDC, Visa now is able to pay the merchant networks in USDC, companies like Stripe and Ramp and others are creating the treasury accounts where you settle your funds in USDC and you're in -- now you're in the flywheel.

The business accounts, the commercial accounts, the settlement -- the actual settlement of the transactions in the card networks natively in digital currency and they get less capital, 24/7 settlement and the edge of the network, which is essentially these tokenized credentials at points of sale is all wired to that.

So I think we're -- there's a kind of coexistence that exists there. And if I'm a card network and there's going to be 1 billion or 2 billion people in the world that are storing digital currency money instead of bank demand deposits, I don't really care, right? I want the users, I want the flows, and I want the connectivity. Now I do think that all this creates cost compression, all this -- because this new infrastructure layer is fundamentally a lower cost -- lower unit economic cost infrastructure and many of the value-added layers that exist, whether it's sort of liability insurance or incentivization mechanisms can also migrate onto this new architecture.

You will see, I believe, over time, in that total stack cost compression, and that will be gradual. But I think that there is -- there are very interesting strong integration points there, and we're seeing that. I mean, just the growth in USDC backed card products is pretty amazing. And the volumes on that growing as well.

It's probably a good time to talk about the Circle agentic stack.

Sure.

And also, there are a few pieces. There's also the blockchain, the Circle Payments Network. How do all of these fit in?

And also like take us through like how do you envisage payments to be in that sort of agentic economy? Because it's very different versus authorization, credential, what you see with the sort of the conventional payments versus just like here's a service, here's an API, I request for payments and boom, you've got the transaction done. So just explain how would payments happen within sort of this new agentic world and how sort of your product stack sort of looks in that world?

Yes. So I'll answer that maybe in 2 parts. I think the first just to understand the kind of model that we have, the scope of what we're building. We're building a kind of kind of 3 layers of the stack. And we started with the stablecoin network layer. And that is the -- we're a money issuer and we run a network, and that network exists as a technology stack and a liquidity infrastructure all around the world. That is this kind of core franchise.

We are -- we have been increasingly building more and more blockchain network technology alongside our stablecoin network, and that really has led us to the development of Arc, which if you kind of use the metaphor of operating systems, applications -- services, applications, et cetera, Arc is an operating system. It is a network operating system. It is a distributed network operating system. And it runs the infrastructure for executing economic activity: contracts, money, assets, financial contracts, governance systems for identity, improving and privacy a whole set of network infrastructure that's needed for moving the economy into a truly digital form.

So Arc is obviously coming soon in terms of its commercial launch. But that's foundational. We built Arc with agentic as a core design primitive. So we built Arc during this age of AI. And we built it expecting that ultimately the primary consumer of the infrastructure would be AI infrastructure and agentic infrastructure. And we talked about that a lot in this concept of an economic OS as a kind of a critical enabler for the agentic economy.

And so what does that mean? It means that every part of the stack from the operating system to our stablecoin network to all the protocols that abstract away: wallets, money movement, security payment, and settlement, all of those pieces that we have built out are available to AI agents. And so AI agents are going to execute transactions. They're going to find the most efficient route and cost and path to execute those transactions.

And they're going to need to be able to settle those transactions on an agent-to-agent basis. They're sort of -- when you look at this sort of agentic economy stack, we sort of see 3 things happening. And by the way, this is -- a lot of this is very new. And a lot of this, I think, has truly taken hold and become compelling in the last 4 to 5 months.

As we sort of flipped the AI infrastructure from something that was more of a stand-alone LLM model to something that actually used agents and deployed agents and you can craft and build agents and even power users and companies can now craft and build agents as well.

So Circle agent stack specifically is a few pieces. So one is, it is a what's called a Command Line Interface for AI to consume and use all of Circle stack. Everything that we do can now be consumed by AI. And so if you're a developer, if you're an enterprise, if you're a financial institution and you want to accelerate building solutions on chain with digital money, the Circle CLI basically gives you an accelerated way. You basically -- the AI can craft and build and deploy on your behalf and can do that very fast. So this is essentially mapping to the new software development paradigm that exists and making that accessible.

The second thing, though, is very specific primitives that we've built for AI and AI agents. So in Circle agent stack, and by the way, you can play with this yourself. If you go to agents.circle.com, if you use Claude or Codac or open Claude, you're crazy and wild or Cursor any of these tools, you can go to agents.circle.com, you can copy a single line of text, paste it in and it will come alive.

And essentially, what we've done is we've created a way for AI, AI agents to create their own wallets. Now you are in charge. So we're not giving total control of the machines yet. But the AI agents can create wallets. And then the AI agents can consume services using micro transactions, using USDC, using agent-to-agent payment standards. We have been helping to author and create the protocols and standards for how agents can pay each other.

x402 is the preeminent protocol for that today. And so effectively when an AI agent comes on to the system, there's a marketplace of services that are available, deep financial research, travel data, you pick it. And what's happening is data providers, service providers, SaaS companies and other AI agent builders are basically able to convert their endpoints, meaning the access to them into gated endpoints that can be consumed by AI.

And the compensation model is happening in USDC. So there's things we built that are very specifically for the agent economy. You can create an agent, your agent can itself become a seller of services. So let's say you build an agent that has some special sauce. It knows a lot, you have proprietary data. It knows a lot about, I don't know, it's like -- let's say, it's an intellectual property attorney agent or whatever you want to build.

And that AI agent itself can render itself as a service provider and other AI agents can consume it. And the transactions are basically instead of people spending gobs and gobs of money on tokens and subscriptions with the AI foundation models, they can have kind of per drink payment for intelligence and work.

So if I need the work of an IP attorney that is an agent, I can pay $0.05 for that IP attorney to do a job for me, that's pretty good. And so it allows you to craft things in that way. Everything is built on crypto. Everything is built on blockchains. Everything is built on our wallet infrastructure, it's built on USDC, it's built on the interoperability infrastructure that we have.

The goal is to make that invisible and when you start to interact with these systems, it's pretty magical because the AI is dealing with all the craft that you as a user would find probably cumbersome and complex.

And do you find that in this world, stablecoins are uniquely positioned versus card networks, because...

I mean of course...

It's kind of...

It's the only infrastructure in the world that can settle transactions through any piece of software, any piece of hardware, anywhere in the world, 24/7, 365 at a fraction of $0.01. We have transactions that can go as low as essentially like $1 million of $0.01 or something like that.

So nano payments as we call them. But even like a $0.05 transaction, let's not go too crazy, a $0.05 transaction, which is, by the way, what inference costs look like. So the ability to transact at very small scales at very high speeds, with settlement times that are in the 300, 400 millisecond time frames. There is no payment system in the world that can do that other than this. It doesn't exist.

And so while you do need interoperability with legacy payment systems, you do need the ability for these agents to -- if they discover there's an endpoint that it's -- I'm going to rebook a ticket or whatever -- or I'm -- the shopping paradigm, right? And I'm interacting in that way. Of course, you're going to want the ability to dynamically create a payment credential that goes into the legacy systems.

But for the intelligence layer and the -- again, the frame of reference is labor is being transformed into AI execution and for huge amounts of the economy over time and labor unit cost is going to be the cost of agentic execution, which is largely the cost of inference and some special sauce. And that can be priced in a very, very different way.

And so I generally don't think there's any better system in the world for this.

Just changing gears, lots happening on payments with stablecoin payments for humans, enterprise, it's now agentic. How does that translate for you to kind of deliver that growth in the sort of the USDC monetary base because we've also deal with this dynamic where you have digital assets, you've had a drawdown in digital assets recently. In that environment, USDC base has remained quite persistent.

Just explain what growth looks like in view of this shift from digital assets to broader payments.

Yes. Look, I think -- we say this a lot, like the -- what's happening with the stablecoin network world and this new financial system, right, it's sort of an economy. And for us, we want to encourage as many applications in the world to be connected to this network, we want as much software in the world connected to this network, as many AI agents in the world, as many financial institutions in the world, as many developers as we can.

We want to get people building on top of our platform infrastructure, which is Arc, our Developer Infrastructure, our protocols, on our stablecoin network, storing value, moving value, settling value in this and then actual application utilities we provide, like stable effects and CPN.

So each one of these benefits from the expanding use cases that are happening for this technology. And I think what you have to believe is that this is a better infrastructure. It is aligned with the biggest value drivers in technology transformation that we've ever seen in history and that the utility of this will just -- will continue to grow.

Now the specific relationship between sort of applications, money velocity and usage to sort of the amount of money that is on the network at any given time, that is very -- nearly impossible to predict, although over the long term, I think we will be able to. But right now, it's very difficult to predict what that looks like. But in a world where businesses and households and others, not just all around the world.

Again, we have to think of this highly globalized, in a world where the benefit of keeping your money digital versus removing it from the fully digital system continues to accrue. Meaning having money fully digital gives it more utility. It gives it -- it becomes higher utility money. That will provide stickiness, right? That will provide stickiness. And so we expect those companies, financial intermediaries and others who are creating the services to store that for people, these distribution platforms and the like.

We have partnerships with many of them, and we'll continue to build lots of partnerships there because we want as many of these platforms in the world to hold that money and keep it in fully digital money and keep it sticky. I think my own view is that there are macro cyclical dimensions to this. There's endogenous market factors like digital asset market factors.

And then there's just sort of this ultimate growth in the TAM of this new utility value of money that comes from this infrastructure. All that combined, I think, is why various serious analyst, I don't know if you've taken a view on this or not, sort of see this form of money growing into the trillions over time because it will just -- it will make sense to store it there and have higher utility.

And just talking about regulation, right? Last year, we had the GENIUS Act, and we probably thought stablecoin regulation is kind of done there. And now obviously, this year has been a lot of clarity with stablecoin rewards being the sort of the sticking point.

Given where we have sort of landed today, how do you see that impacting you and Circle and its business model?

So we believe the CLARITY Act is a very important piece of legislation for Circle. I think, obviously, the big thing for us was GENIUS Act. And we're very pleased because that really paves the way, not just in the U.S. but globally for the mainstreaming of what we do, the core business of what we do.

But the CLARITY Act is very powerful in several respects. The first is it creates an end-to-end legal framework for how businesses can build blockchain networks with digital tokens and where those digital tokens as a form of commodity asset can be utilized for incentivization, governance and utility.

And that is what we're building with Arc. And that is what we're building with Arc token. And so having a very clear, clearly defined legal framework for how a company like Circle can operate a blockchain network and have a digital token with a clear regulatory framework around it is very powerful.

And so it's not just powerful for Circle and our own initiatives, but it unlocks entrepreneurship because any developer, any business that wants to use digital tokens in their business, it gives a clear pathway to form capital around these digital tokens, to utilize them as utilities and as incentive and governance mechanisms. It's a very, very powerful new system that will transform capital markets in my view. That's one.

The second is very clear rules of the road for how traditional financial institutions, market structure, banks, brokerage, custodians, all players in the existing financial system, how they can implement and integrate to this market with clear guidelines from their primary regulators enforce through this, which is just a huge unlock for more activity in this, not the trading of Bitcoin. It's a huge unlock for the tokenization and trading of every form of asset and financial contract in the world. So it paves the way for an upgrading of the financial system onto these stacks, which inherently benefits everything that we do.

And then finally, on the stablecoin reward piece, we really like the compromise language because what it does is it says, if you're a market platform and you're a distributor of USDC that you can absolutely pay rewards to your customers, for the utility of how they use those stablecoins. So it encourages not just money sitting around doing nothing, it encourages usage. It encourages utility. And that's ultimately what we're interested in.

We're interested in the proliferation of the utility value of this new form of money. And so aligning incentives with that is actually ultimately supportive of growing our own network value proposition and network effects as well. So we actually -- we think that, that compromise language is very good. Obviously, a bill is a bill until it's a law, and we can go back to Schoolhouse Rock! if you ever remember that cartoon. But we're just a bill right now. So we'll see what happens.

With regulatory clarity, you also get competition, more stablecoin issuers in the market. And there are like different blocks of it. I think I was looking at the audience question, again, sort of top of mind for investors as well -- at one end, you obviously Tether, which is a different dimension of competition. You're also seeing Stripe build stablecoin stack with bridge. You've potential talk about even banks building their own stablecoins.

How do you look at that sort of broad competitive landscape?

Yes. So a couple of things. I think the first is these are network businesses. Stablecoins are networks. These are stablecoin networks. They are not coins, they are networks. And networks have network effects. And they have very powerful flywheel driven network effects. The more apps that are integrated to the network, the more utility the network has. The more demand for the digital currency, the more liquidity that exists all around the world creates liquidity network effects, and then there's a set of infrastructure and regulatory apparatus that you have to build to make these truly global network.

We have achieved very high network effects. And on our earnings call, we -- in the last 2 earnings calls, we've sort of showed the on-chain transaction volume of stablecoins. And we have grown according to third-party data to over 60% of all on-chain transactions are in USDC, and according to another third party as much as 80% of all on-chain transactions are in USDC.

So we are the most used dollar-digital currency in the world. Tether is the second, in terms of the transactions. And if you look at all other stablecoins combined, it rounds to 0%. So there have been a lot of products that have launched. There have been a lot of companies, including big companies who have tried to build these.

But it's not just building the coin. That is not the problem. You have to build a scaled network with network effects, liquidity network effects, developer network effects, and that is very hard. It takes a very long time and so what you see is that the biggest companies in the world, whether it's a major payments company like Visa, it's one of the biggest consumer Internet franchises in the world, Meta, Stripe is a great example. Stripe is all in on USDC. All their products end-to-end, their treasury products, the payments products, the linked product, their wallet products, USDC is across everything that they're doing.

Cash App is a recent example. The major institutions, they're not launching their own stablecoins. And they're certainly not using Tether. They're using USDC.

And we think these are very high barriers. And I think we feel very confident in the strength of that position that we have. That's not to say there are not going to be lots of people who are launching products in this space. There may be what I'll call walled garden stablecoins, where effectively it's a walled garden. It's a set of that are doing this, and they're using the technology within their walled garden, that's fine.

But for global scale, globally available general utilities on the Internet that works for everybody I think it's a -- we've said a winner take most market structure. And I think we're off to a very good start. I mean a year ago, after GENIUS passed, you couldn't go a week without some rumbling about Meta is going to relaunch a stablecoin or Amazon is going to launch a stablecoin or all these things. And what we're seeing is actually the opposite.

We're seeing that as this -- as companies make these choices, they're making a bet on the platforms that have the greatest reach, interoperability, network effects, liquidity and so on.

And another topic, which is, again, top of mind for investors is your revenue model, which largely been driven by your monetary base impacted by the sort of the rate environment. And we've also -- it's also been encouraging to see the other income, which is the more fee income kind of growing. How do you see that dynamic? And obviously, you also had the launch of Arc, which kind of contributes to that other line.

Just take us through what -- how you expect the revenue model to evolve?

Yes. I mean, look, I think clearly, as stablecoin utility grows as we continue to build more network effects as we sign more distribution relationships, which is critical, the distribution relationships of say crypto exchanges of the past number of years, we'll have distribution relationships with lots of other types of companies over time.

But to grow that monetary base and grow that utility, we -- obviously, we continue to believe that in the coming years, that is going to remain a significant source of growth and revenue for the company, obviously. At the same time, we've been laying down the foundation for a wide range of other revenue sources. And you've seen that grow. You've seen that grow with the kind of blockchain infrastructure work that we do. You've seen that grow from an aggregation of transaction fee-based models. But I think now we've got kind of these 2 other pillars as we talk about them internally, we have the Arc pillar, and we have the kind of CPN pillar.

In both of those areas, we're very focused over the medium term on significant monetization from these. We're very focused on that. And obviously, as we talked about in our recent earnings call, we will, after the next quarter reporting, we will talk more about the impact of Arc on other revenue, the impact of Arc across all of our financials, right?

But our -- we believe Arc can become a significant revenue driver for the company in a variety of different ways: at the transaction fee level, with our token. And then over time, we've obviously said and it's in the Arc token white paper that the Arc network is going to migrate to a staking security model and a staking network. And so that is going to create opportunities not just for Circle, but for lots of companies to have participate in transactional revenue streams on the Arc network.

It's important to remember that Arc is an ecosystem platform. There are tons of other companies that are building it and will be operating it with us and all of those companies have the opportunity and all those developers and products have an opportunity to make money with us and build value together.

So it's a big tent mentality, so I'd like to say. So certainly more to say there. And we've shared, of course, we've continued to make progress on product, financial institution participation and volumes on CPN. That is a -- that remains a significant focus for us. We want to expand that and continue to expand that more aggressively. And as we said from the early stage, at first, we want to get it to a critical mass of volume, and then we want to look at how we can begin to monetize that more and that is our -- that is fully our intent is for that to -- certainly over the medium term to begin to be a real source of monetization for the company.

I'm going to ask a specific competition question from the audience, which is, you've seen Tether growth in scale and also seemingly move into more compliance-driven workflows. How do you sort of see that the Tether kind of coming back into the -- coming into the fold, particularly the U.S. compliance.

Yes. I mean, I think Tether has experimented with issuing a new coin, not USDC, a new coin. I think it's called USAT. I think it has $20 million of circulation and basically 0 transaction volume. And I think they have a distribution deal with a video stream site I think it's like a social network video site as a wallet.

So I haven't -- like I have not seen that anywhere in the institutional market, but it is an experiment for sure.

And just the offshore product, do you think at some point...

And look, I can't telegraph what they'll do there. I mean obviously, USDC is it's almost like a macro hedge fund basically. They sort of speculate on gold and Bitcoin and make loans. And so it's not a dollar for dollar. It's sort of -- it takes a position so like their mark-to-market -- you got to look at their mark-to-market because it's like a hedge fund. And the amount of mark-to-market gold was down, bitcoin was down, so their income was down.

Like that's unless they completely change from being essentially a macro hedge fund that connected to a stablecoin network to actually being an end-to-end compliant infrastructure that is subject to Central Bank supervision around the world.

I don't know that, that will be desirable for the mainstream to use.

Let me end this with this question. What do you think investors misunderstand about Circle?

I mean I think I'd say the #1 thing is that Circle is -- we are building an Internet software platform like business. We are an enormous amount of what we're building is fundamental platform infrastructure for developers, enterprises, and others to build on and that it is a network scale model. And I think naturally, I think the first inclination is, oh, there's this thing. It's USDC, you have USDC, you have USDC reserves, like et cetera.

So it's very easy to sort of say, okay, this is what this is. I think when people get to know me, get to know us, they start to understand that the ambition is much broader. We believe that we are in the midst of the global economic system and the global financial system colliding with a completely new software architecture built from the ground up, natively on the Internet, natively on this infrastructure, natively with AI. And there are going to be Internet scale platform winners like the Internet scale platform winners in media, commerce, communications and other categories, but in this financial system. And we think that's the scale of the opportunity for us.

All right. I'm going to end it here. Thanks, Jeremy.

Thank you.

Ladies and gentlemen, thank you for joining us, and welcome to Circle Internet Group's First Quarter 2026 Earnings Call. [Operator Instructions]

I will now hand the conference over to Scott Blair, Circle's Head of Strategic Finance. Scott, please go ahead.

Thank you, operator, and good morning. I'd like to welcome you to Circle's First Quarter 2026 Earnings Conference Call. I'm Scott Blair, Circle's Head of Strategic Finance. I'm joined by Jeremy Allaire, our Co-Founder, Chief Executive Officer and Chairman; and Jeremy Fox-Geen, our Chief Financial Officer.

Earlier this morning, we posted our earnings press release and earnings presentation on the Circle Investor Relations website, investor.circle.com. A transcript of this call will be posted on that website once available. I need to remind everyone that our earnings press release, presentation and this call contain statements that are forward-looking. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events.

The events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in our SEC filings.

Additionally, nothing in this presentation constitutes as an offer to sell or a solicitation of an offer to buy securities or an [ invitation ] or inducement to engage in investment activity. We will also disclose non-GAAP financial measures on this call today. Definitions of those non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures can be found in the earnings press release and earnings presentation, which are posted on Circle's Investor Relations website, investor.circle.com.

Non-GAAP financial measures should be considered in addition to, not as a substitute for GAAP measures.

With that, I'd like to turn the call over to Jeremy Allaire.

Thank you, Scott, and good morning, everyone. I want to begin at a higher level and describe where I think we are and the guiding forces driving Circle's thinking and strategy. We believe we are going through the largest platform shift in the history of the Internet and it is accelerating. Specifically, this platform shift is the collision and compounding effect of new operating systems for intelligence and new operating systems for economic activity.

These 2 major new technology infrastructures are converging into a new Internet stack that we believe will transform the global economic system over the coming decade. Last quarter, we talked about the rise of AI agents and the Agentic economy and the need for these AI agents to operate on economic infrastructure that enables trusted value exchange and economic coordination.

We also talked about the next generation of blockchains forming into economic OSs where value, identity, policy and contracts can execute and move across these new onchain computer networks. We are rapidly moving into a world in which AI-powered software machines, coordinating on blockchain computers, deliver an increasing share of global economic activity. This is a profound shift and one that is highly aligned with Circle's fundamental vision, mission and strategy.

We are building a leadership position in this new era from a position of considerable strength. Over the past several years, we have built out a broad-based Internet financial platform that compounds through several reinforcing flywheels. Each pillar of Circle's platform is self-reinforcing. Our digital assets flywheel, encompassing our stablecoin network and core digital assets drives increasing liquidity, utility and developer integrations, which in turn continues to grow the value of the network.

The Arc network or what we call Arc is entirely built on network flywheels and grows as more apps are launched, more assets are issued and as liquidity and distribution flow through our interoperability infrastructure. These flywheels accrue to Arc network stakeholders, but also reinforce and help grow Circle's other platform pillars. Both of these, in turn, grow the flywheels for our own apps, together, Circle's apps, including CPN and Circle Mint continue to drive more use cases, greater transaction volume, user growth and distribution.

Our apps are anchored in Circle's digital asset network and are being built natively on Arc. These flywheels work together to create one of the most compelling Internet financial platforms in the world, and now we are layering across this entire platform, the deep product and technology capabilities to compound alongside AI and Agentic economic growth.

Now turning to the quarter. I want to focus on a few key highlights. First, we ended the quarter with $77 billion of USDC in circulation, representing 28% year-over-year growth. Alongside USDC supply growth, we also saw enormous growth in transaction activity with onchain transaction volume up 263% to $21.5 trillion.

Total revenue and reserve income of $694 million, grew 20% year-over-year. Adjusted EBITDA grew to $151 million, 24% year-over-year growth and we continue to maintain a strong adjusted EBITDA margin of 53%. We've also had a number of major platform and product launches recently, including today's launch of our new Circle Agent stack, which I'll discuss in greater detail shortly.

We launched CPN managed payments, which brings the power of CPN to banks, financial institutions and payment service providers in a turnkey fashion and we continue to see robust growth in CPN volumes and financial institution adoption while also seeing many more mainstream USDC launches and integrations.

Finally, the Arc network is getting ready for lift off. We have had a highly successful test net. And today, we announced the presale of the Arc token, raising $222 million at a $3 billion fully diluted network value with lead investor A16Z crypto alongside a range of other outstanding strategic partners.

Turning to our stablecoin network and digital assets growth and adoption. We continue to see very strong enterprise and use case expansion. Meta the world's most preeminent social platform began using USDC for creator payouts. This is significant because just last year, there was a view that big tech companies would introduce their own stablecoins. We've been very clear that the network effects, liquidity and global reach of our network, along with sound regulation make USDC the preferred option for major enterprises integrating this technology and that it makes little sense for these companies to go it alone.

Meta is demonstrating exactly that. We're seeing this across the board. DoorDash paying out USDC, the drivers and other global enterprises embracing USDC in their payment flows. Polymarket adopting USDC for funding and settlement on their leading prediction market. Innovative financial institutions like Arbor Bank using USDC to power 24/7 banking and expanded relationships with leading exchanges, including the top exchanges in Korea, a thriving market with significant growth opportunities for USDC.

In capital markets, we're continuing to see strong expansion. Circle is participating in a DTCC test run of Tokenized Securities Trading and we're seeing emerging traction with USDC as collateral on regulated derivatives exchanges. In the traditional enterprise space, treasury management applications are really taking hold. We recently announced a broad partnership with [ Tyriba ], one of the leading treasury management platforms, serving thousands of enterprises and many Fortune 100 companies to make USDC payment flows a seamless part of their solution, Ramp one of the fastest-growing fintechs in enterprise treasury and payments is adopting USDC for a wide range of international and domestic use cases and cross-border and treasury flows are increasingly moving to USDC across leading banks, fintechs and even the start-up ecosystem with wide combinator driving funding operations in UDC.

The use cases are expanding, and this is driving further flywheels. While the stablecoin market itself was relatively flat in the quarter, it grew 32% year-over-year. More importantly, stablecoin transaction volumes continued to grow. According to Visa's reported figures on commercial transaction volume, USDC continued to gain market share and now accounts for 63% of all stablecoin transactions.

Looking more broadly at onchain volume. USDC transaction volume grew over 260% year-over-year to $21.5 trillion in the quarter. Other third-party data sources, which include Solana transaction volume, put USDC's volumes at nearly $30 trillion in the quarter, with our market share at approximately 80% of all onchain transaction volume.

I want to underscore an important point. USDC is the most widely transacted and used dollar digital currency in the world. No dollar digital currency is achieving anywhere near the volume of onchain transactions as USDC. And as this market accelerates, we believe this leadership position and the network effects that flow from it will continue to compound to Circle.

We also remain the most liquid and available digital dollar in the world, having minted and redeemed nearly $150 billion of USDC in Q1 alone, providing reliable and compliant digital dollar dial tone through our global liquidity network all around the world. Alongside USDC's growth, we are seeing strong growth from our other digital assets, EURC, which has long been the world's largest euro stable point, grew 2x year-over-year, ending the period at EUR 358 million. Our tokened money market fund, USYC, grew over 300% year-over-year. And as of May 7, stands at over $3 billion in assets.

Circle's USYC is now the largest tokenized money market fund in the world and a key building block for collateral and digital asset trading markets. We are also expanding our digital assets portfolio. We recently announced the planned introduction of a new Bitcoin product from Circle, SERBTC which pending official launch would provide a compliant and secure wrapped version of Bitcoin that will be issued by Circle on both the Ethereum and Arc networks. We see a significant opportunity for programmable onchain primitives for Bitcoin from Circle.

As I mentioned in my opening, Arc is getting ready for lift-off with the ArcMainNet launch coming soon. Arc has been designed with a broad group of incredible partners from across the financial system. We have built what we believe will be one of the most institutionally ready networks in the world, a network that will be operated by leading financial institutions with the trust required for global economic infrastructure.

We are bringing powerful interoperability infrastructure to the network and we have optimized Arc for asset issuers, payment terms and capital markets applications. Arc comes with purpose-built features that simplify how stablecoins and tokenized assets bring the financial system and financial services onto these new operating systems. And everything has been designed from day 1 with AI and Agentic flows in mind, from developer tooling to new services on Arc built entirely for AI agents.

Arc is not just our core layer 1. At launch, Arc will support a suite of assets and protocols from Circle and third parties. We are bringing incremental services to make these accessible and ready and providing a comprehensive set of developer tools, and bundled applications from Circle to deliver meaningful value to Arc users on day 1.

Our Testnet has performed very well. Users are transacting at scale. Arc has a vibrant and growing developer community building on the platform and I believe we and the entire ecosystem are prepared as we approach MainNet launch. I want to focus on one of the most significant components of our strategy with Arc and more broadly for Circle. We are becoming the leading interoperability platform in the entire blockchain ecosystem.

As you can see [Audio Gap] we've continued to scale the cross-team transfer protocol, reaching almost $50 billion of volume in Q1, representing 3x strategic customer capability with Arc. We've announced that we're opening up CCTP to other asset issuers. We build the highways for USDC, and now we're opening them to other stablecoin and real-world asset issuers. Anyone doing tokenization can get the same interoperability, safe transport and distribution that we've already built around the world across all these blockchain networks.

We're also turning on seamless bridges for end users and enabling flows of leading assets from other chains with a new canonical bridge from Circle. This infrastructure with safety, trust and monetization options available to both Circle and third parties that use them is a pillar capability of Arc and Circle's platform more broadly. And this is coming at a very important time as recent hacks put into question the safety and reliability of some of our competitor networks. And our focus on foundational security was further reinforced with our post-quantum readiness road map announcement, including that transaction messages on Arc will be post quantum secure on day 1.

On our path to building Arc, we are excited to announce today that Circle has undertaken a presale of the Arc token. Alongside the presale, we have released the Arc token white paper available today on the Arc website. The Arc token will help to bootstrap and scale the network by aligning participants, including Circle with the long-term success of the network and enabling governance, staking in security and other protocol functions across the network.

This is about building a new economic OS with broad-based stakeholders across the global financial and developer ecosystem. That means that every app builder, every end user and every institution building and operating on the network can become a stakeholder and ultimately participate in governance. Our Arc token presale was led by A16Z crypto and includes some of the world's largest asset managers, including Apollo Funds, Arc Invest, BlackRock, Janus Henderson Investors, exchange, fintech and capital markets firms such as Bullish, Intercontinental Exchange, Marshall Waste and SBI Group and leading global banks such as Standard Charted Ventures as well as venture firms, including general catalyst, Hahn Ventures and IDG Capital. As I noted at the outset, Arc is built as an economic OS that anticipates this convergence with AI operating systems, and we are accelerating our product investments in this space, both on top of Arc and by building on the wide range of applications and integrations that already exist for USDC.

Today, we are rolling out key parts of the Circle Agent stack. This morning, we launched agent wallets, a new product that allows agents to permissionlessly build onchain wallets, conduct transactions, on-ramp USDC, and operate within predefined policies and safety guard rails. We also brought Agent Nano payments online, where USDC transactions as small as 1 million of a penny enable high-frequency machine-to-machine payments. And all of these features are built supporting interoperability across agents and API services through the X402 standard, which Circle is helping to design.

USDC already has an enormous lead in Angentic payments today, with 99.8% of all X402-Agentic payments being settled using USDC. We also launched the first version of our agent marketplace, an open hub for users and agents to discover, pay for and invoke agent services that transact in USDC programmatically with over 500 end points already available for agents.

Finally, we launched the Circle platform CLI, providing a command line interface to the full range of circles infrastructure and enabling both developers and AI agents to bootstrap, build, automate and integrate all of Circle's infrastructure into AI applications. Our adoption of AI is not just outward looking.

We are undertaking a significant internal transformation and AI adoption inside Circle is accelerating. We are building an AI-driven company, aggressively rolling out AI infrastructure and building agentic workflows to drive productivity and acceleration across the business. With this, our product velocity is increasing dramatically. You may have noticed that we are shipping more technology at greater speed, enabled by AI-assisted development harnesses.

We are also reimagining every business function with AI agents proliferating across circle and beginning to manifest new ways of coordinating, executing and delivering our business. Notably, we have seen rapid uptake of AI coding tools, weekly active users of AI tools, building automations at Circle have rapidly grown to approximately 85% of employees. Our teams have already deployed over 600 AI native apps this year, as we have capitalized on major breakthroughs in agentic and AI development.

As a regulated company, we approach this comprehensively, considering the impact on our talent security posture, financial controls and the governance required to ensure these deployments are conducted safely. We will continue to discuss our AI transformation as it is one of the most exciting things happening as we become an Agentic AI-driven company. We are also continuing to see strong progress with our expanded payments products with multiple major new product launches since introducing CPN.

The product line is now becoming robust and competitive and CPN has been growing. We ended the quarter with $8.3 billion of annualized total payment volume on a trailing 30-day basis, up 17% quarter-over-quarter. And as of May 7, we are approaching $10 billion of annualized TPV, up nearly 75% since we last reported. We've now enrolled over 136 financial institutions into using CPN products, up 36% quarter-over-quarter.

Alongside this growth, we recently introduced CPN managed payments. To put managed payments in context, many banks, financial institutions and payments firms are challenged to get up and running on stablecoin payment networks such as CPN. The biggest hurdles have been licensing, USDC liquidity, account infrastructure for stablecoin custody and blockchain compliance operations, most of which they have not yet built out on their own.

With managed payments, we offload that complexity on to Circle where we operate these capabilities as a managed service. We can bring a bank into CPN on an accelerated basis, delivering all of the benefits of Circle's global infrastructure, our compliance, liquidity, network effects and interoperability, while compressing time to market. We see this as a significant opportunity to bring banks, payment firms and financial institutions onto CPN at scale. I will conclude with where I started.

Today, Circle is an early-stage company and at the beginning of executing against our long-term strategy. We have built fantastic platforms and businesses and we are fortunate to work with an extraordinary number of leading institutions. Each quarter, we see more of the greatest companies in the world to leading technology companies, financial companies, enterprises and others adopting our technology to make the financial system work better.

We are entering a fundamentally different era, an Internet financial system era in which economic operating systems and intelligence operating systems are colliding, software-powered money, a software-powered economic system. This convergence of AI and economic activity is happening at Internet scale and velocity. We see glimpses of this today the power of open programmable money on our stablecoin network, which is seeing significant growth in the velocity and quantum of transactions. And we are laying down the next major layers that are necessary for this new Internet paradigm to accelerate and take hold.

It's an incredibly exciting time to be building here at Circle, and we are thrilled with the progress we have continued to make this past quarter.

With that, let me turn it over to Jeremy Fox-Geen, our CFO, to take you through the financial results.

Thank you, Jeremy, and good morning, everyone. We delivered a strong first quarter with USDC becoming the most widely used digital asset on chain and accelerating product launches, adding breadth and depth to our platform. Our financial results reflect the continued adoption of USDC and our consistent and disciplined execution.

I'll start by reviewing the quarter and then turn to guidance. USDC circulation ended the quarter at $77 billion, up 28% year-on-year, although roughly flat sequentially despite the roughly 45% decline in digital asset markets since their peak in October 2025. This reflects the underlying growth in noncrypto utility and use cases. USDC held within Circle's platform infrastructure grew 3.5x year-over-year to $13.7 billion in the first quarter, representing 18% of total circulation.

The reserve return rate was 3.5% for the quarter, down 66 basis points year-on-year, reflecting the decline in [ SOFR ] during this period. Total revenue and reserve income was $694 million in the quarter, up 20% year-over-year as growth in circulation and other revenue was partially offset by that lower reserve rate during this period. Total distribution transaction and other costs increased 17% year-on-year to $407 million.

Revenue less distribution cost margin was 41.4%, up 1.5 percentage points year-over-year, driven by growth in U.S. DC held on our platform and by the growth in other revenue. Quarter-over-quarter margin increased 1.3 percentage points, driven by growth in other revenue, partially offset by a mix shift as coinbase represented a larger share of circulation during the quarter.

Other revenue was $42 million, up 2x year-over-year. Subscription and services revenue was $34.9 million, primarily from blockchain network partnerships. Transaction revenue was $6.7 million, an expected decline from last quarter, where we had a $7 million benefit from the [ Canton ] coin launch. Despite that benefit in Q4, other revenue grew quarter-over-quarter.

Total revenue and reserve income less distribution transaction and other costs grew 24% year-over-year to $287 million. Adjusted operating expenses were $136 million, up 32% year-over-year as we continued to invest in our product, distribution and operating infrastructure to drive long-term growth.

Adjusted EBITDA grew 24% year-over-year to $151 million, reflecting our continued disciplined execution as we invest in growth initiatives. Adjusted EBITDA margin for the quarter was 53%.

Turning to guidance. We are leaving our full year 2026 guidance unchanged. However, this guidance does not include the future financial impacts of the Arc token presale, Arc incentive programs or any Arc-associated revenue streams. In the future, when Arc tokens are created and delivered, we will recognize the value as other revenue. There will also be impacts to other costs, RLDC and adjusted EBITDA, particularly as we enter into token incentive agreements and open up the surface area for other Arc-related revenues.

We believe Arc has the potential to become an important long-term growth factor. While it's too early today to quantify the many impacts from Arc and the Arc token, we plan to provide an updated view of guidance on our next call. And with that, I'll turn it back to Scott to start the Q&A portion of the call.

Thanks, Jeremy. We're excited to kick off Q&A with a couple of questions that we collected from our retail analysts using the Say platform. Our first question comes from Brandon G who wants to know what is Circle doing right now to remain the key leader in the stablecoin market?

Thank you. This is Jeremy Allaire. Happy to take the question. Just as we just shared, in Q1, according to third-party data, we saw USDC account for 80% of dollar digital currency transactions onchain. And that's up considerably year-on-year. And so we are -- we feel very good about the growth and the traction and the adoption that's happening there. We obviously are continually focused on this, and I'll highlight a few key things.

The first is just making sure that our stablecoin network in USDC is widely available as possible around the world, expanding our global reach, expanding the access and liquidity to USDC in markets, including emerging markets all around the world. We have significant initiatives there. Obviously, expanding the partnerships and the use cases and the kinds of firms that are building on USDC. USDC is part of a stable core network that has network effects. And so when the world's largest social platform like Meta begins to use USDC, or major e-commerce companies like DoorDash begin to use it or treasury management systems that are making and receiving payments between enterprises begin using it. That multiplies the network effects of USDC and those growing use cases then spill into more companies that embrace those use cases. So those are major forces, again, helping support and drive that.

And then there's new things that we're building. So Arc itself, which we talked a bit about here on the earnings call is fundamentally a stablecoin-native layer 1 blockchain infrastructure. It is going to bring, we believe, a wide array of applications in payments, in capital markets and in agentic as well. And so that really leads to another key focus for us. Again, we talked about it with the Circle Agent stack launch today.

We believe that the dominant form of transactions in the identic economy will be conducted on these new economic operating systems and networks and that well-regulated digital cash instruments like USDC will be the preferred form of payment. And in fact, today on these AI agent protocols like X402, USDC represents 99.8% of all the transactions that are happening.

And then finally, we're working to make sure that all around the world, governments have clear policies so that these digital dollars can work effectively everywhere. And so it's very holistic. It's go-to-market, it's product, it's innovation, it's policy, it's international, and those are some of the things that we're doing.

Our second question comes from Tyrel and he's asking what percentage of USDC usage today is tied to real economic activity versus trading an arbitrage? And how is Circle actively shifting that mix towards durable nonspeculative demand?

I'll happily take that as well. So there's more and more great third-party data that looks at all of the different types of activity that are happening. And so we see it within our own activity and customer base, and we also look at that third-party data. So for example, in our call, we talked about Visa's new analytics that they've been reporting on for some time, which looks at commercial transactional activity and growth. And there, for example, in that analysis, we saw multi-hundred percent growth year-over-year. We saw that USDC is approximately 60% of the traffic in commercial, real commercial transactions that are happening. But then again, in our own data, what we see is the types of companies that are building on our infrastructure and that are proliferating around the world, many of these are financial institutions building products to deliver digital dollars to users around the world.

CPN itself, for example, which since we last reported, we've seen the annualized total payment volume on a trailing 30-day basis. We've seen that grow 75% since our last reporting period. That's fundamentally all driven by B2B cross-border flows that are using stablecoin payment network infrastructure like CPN to accomplish this. And then, of course, in the use cases that we're talking about here today, whether it be Meta or banks offering 24/7 rails with USDC, treasury management companies like Kyriba that work with many of the Fortune 100 and thousands of companies. All these are driving those new use cases. And obviously, centrally having something like GENIUS Act and the forthcoming Clarity Act, are crucial because this now becomes part of the legal global financial system. And so that gives corporations of all sorts and financial institutions of all sorts of confidence to build and use this technology.

Thanks, Jeremy. Before I turn it over to the operator, I want to thank Brandon Tyrel and everyone else who participated in providing questions on the same platform for our earnings Q&A. With that, operator, please begin the rest of the call.

[Operator Instructions] Your first question comes from the line of James Yaro from Goldman Sachs.

[indiscernible] on behalf of James. My first question was around could you update us on the drivers of the robust RLDC margin in the quarter? And whether this level could be sustained potentially? And like as it was well above your RLDC target range.

Yes, thank you for the question. It's Jeremy Fox-Geen, I'll take this. We don't break down specifically, right, the drivers and the component pieces of RLDC margin other than the information we provide in our earnings materials, which shows the composition of that with net reserve margin and other income. And so you can see those pieces there. We had strong growth in other income, which provides a boost to the RLDC margin.

Now speaking more broadly about sort of the net reserve margin piece. As we've said before, there are many puts and takes as to how this evolves over time. What we saw this quarter, and you see it in the materials was growth in on-platform at Coinbase, particularly in the last month of the quarter. And we also saw some modest pullback in certain other highly incentivized channels. And that gave us, we think, a very strong RLDC margin for the quarter.

That was super helpful. Just one follow-up over here. I wanted to touch on Circle Agent stack and an update on stablecoin use cases for agentic commerce. How much adoption has there been so far? And what do you look to achieve over here?

Yes. I'll happily take that. The Circle Agent stack launch is a significant launch for us. It makes available all of the power of USDC of Circle's infrastructure to agents, whether they're agents that developers are building or just autonomous agents that already exist to be able to store value transact, do that safely. What we have seen are a couple of things.

So first, obviously, there are agent payment protocols like X402, which are seeing very nice growth from a -- really from a very beginning. The explosion in agentic technology has really happened just in the past several months. But every single conversation we're in with enterprises, with financial institutions, with key partners, every single one of those is focused on their applied AI strategy and how they intend to apply Agentic. And so if you're a platform company like Circle and you are looking at where the world is going. It is very clear that AI-driven and agentic driven infrastructure and automation is going to be very central to that. And so we've made this a huge priority in terms of the product stack.

I would say, additionally, look, what's interesting is you do see in the transaction volume growth in stablecoins and notably USDC, which has seen, as noted according to third parties, as much as 80% of onchain transactions and digital dollars happening at USDC. There's sort of what happens with agents on the actual agent payment protocols like X402. And then there's agents that are just being deployed and executing in markets in other places.

So we do actually believe that some meaningful portion of activity is AI-driven already, and we've seen that kind of sharply increasing in Q1 as these Agentic technologies have increased. But this gets to the kind of core of kind of how I opened the call, which is our core thesis is that this kind of convergence of these AI operating platforms that are scaling and these economic operating platforms on these blockchain compute networks, these are converging and they're very synergistic and that the agentic economy, which we think is going to power more and more of labor, work, output and exchange is where the entire economic system is headed, and so we're positioning ourselves, obviously, with not just with USDC, but across Arc, the agent stack and other things that we're doing.

Your next question comes from the line of Kenneth Worthington from JPMorgan Securities.

In terms of regulation, how do we think about a world for USDC, where revenue for Circle continues to be earned on assets but rewards are paid to end customers more based on transactions. How and where does this impact Circle's promotion strategy for USDC, if at all? And does legislation to seek more transaction-based revenue streams?

Great question, Ken. I'm going to take the first part of that, and then I'm going to have Heath Tarbert, Circle's President jump in on the second part of that. I think what's notable is -- and you've heard us talk about this in the past, which is we are very focused on driving the utility value of this new form of money. And as we emphasized on the call, we're seeing this continued diversification of the range and types of companies and use cases that are growing this and driving this.

And what's notable about legislation in this space is that the legislation very specifically is saying, hey, look, if you're a distributor of Stablecoins and Circle under the legislation, which Heath will talk more about, Circle can continue to enter into great economic relationships with platforms, not just in the U.S. but all around the world. But those platforms are going to -- if they want to incentivize users with stablecoins, it has to be based on real-world utility. It has to be based on real transactions, real payments volume, real activities, and that's exactly the kind of incentivization that we want to see because it aligns stablecoin rewards with the growth of the utility of our network and because this is a network effect driven business, that alignment actually, we think, can provide a really, really powerful tailwind, we believe, to further adoption of USDC.

But to comment specifically on what's happening with CLARITY Act, and what the currently published tax looks like, I'll have Heath Tarbert jump in as well to share his perspective.

Thank you so much, Ken, for that great question. Maybe just take a step back on CLARITY more generally. I mean, CLARITY, we're not waiting for Congress to act to make history as a company. But obviously, if Congress does act, the legislation will be helpful to us for a variety of reasons. Number one, obviously, we announced today the token presale. We've been working on the blockchain. All of those things are addressed in the CLARITY Act. So it's incredibly helpful for us as a full stack Internet platform company for our businesses apart from stablecoins.

Secondly, which is really important, is it allows and provides the legal certainty for all sorts of traditional financial institutions and firms to start dealing in and using digital assets at scale. And so when you think about tokenization of securities, well, again, obviously, they're going to use potentially USDC, as the cash leg of all of those transactions. And then the part that you specifically mentioned, Ken, that's in Title IV of the Act. And Title IV of the Act is really important because it actually specifically addresses stable coin use cases by banks, by broker-dealers by custodians and gives them the permissibility that they need to be able to engage in these activities. And of course, the very last provision there, which I think you're going to see is Section 404 is the so-called compromise. But as Jeremy said, we don't view it as a compromise at all. It's actually the right answer. And for Circle, we believe it's far superior to the status quo.

We obviously built USYC, which is the world's largest tokenized money market fund for passive yield on digital assets. But USDC is different, right? Its value is in its velocity and its utility, not in its idleness. So as Jeremy mentioned, we're actually laser-focused on incentivizing its use because that flywheel is going to drive growth. But quite frankly, no deposit substitute model can even match. And so the current version, I'm not sure if it's public yet, but I think when it gets out there, we're likely to see Congress specifically referring to stablecoin use cases for rewards that are things like payments, conversions, remittances, market-making activity, posting of collateral and then things that are native to web 3, like staking and validation.

So if you think about that, those are the very things that Circle wants to incentivize and it may very well be that Congress is going to help us do exactly that.

Great. Just a simple follow-up. How do we think about G&A from here was $57 million. Is that sort of a good jumping off point as we think about the rest of the year.

Yes. As we think about the rest of the year, I'd just refer you to the overall OpEx guidance that we've given, right, that has all the pieces within it. We continue to invest at this incredible opportunity, right, in growing our distribution, our product set, our capabilities. But as I say, you can see our guidance there.

Your next question comes from the line of Pete Christiansen from Citi.

Impressive pace of execution here. Jeremy Allaire, the Arc White Paper frames Arc is native coordination and security asset for the network. But I guess, over time, I think, how should investors think about the balance between value of activity accruing to Arc itself versus Circle. And I guess, how do you avoid any economic tension between the two?

Yes. Thanks, Pete. Happy to talk about that. So I think the first is just understanding these new blockchain network computers, these new types of economic operating systems, draw on kind of stakeholder engagement models that we've seen in the blockchain space with other blockchain network tokens. They kind of build on kind of stakeholder engagement models of kind of financial network consortiums because Arc is obviously a permissioned infrastructure of financial infrastructure companies and open source more generally. And so I think the key is Arc and Arc token are designed specifically to really drive value for all of the stakeholders across the Arc ecosystem.

And as I mentioned in my opening comments, yes, Circle is the kind of genesis of this. We've built this technology. We are ushering it into the world. And as noted in the Arc token white paper, Circle retains 25% of the Arc tokens, and that's significant. And that is the sort of huge amount of value that Circle has created and is bringing into this. But in order for a distributed network like this to thrive and in order for it to become a global scale OS that the economy is running on, we need major companies. We need major stakeholders. We need the developers that are building the applications on top of this, the end users that are driving the volumes of activity on this.

All of the stakeholders in that there's an opportunity to not just have them incentivize economically but fundamentally to get the utility out of this digital token. And again, CLARITY Act really is -- I'll reference that again here because it codifies a framework for companies to be able to use digital tokens to build incentive systems and incentive alignment for product services, applications and other things. So it is designed to do that. And it is ultimately something where as an open network, we need participation in governance as well. And so Arc token provides that mechanism for governance.

And so you can really think about Circle as a founding creator and stakeholder, and we will get as Jeremy alluded to in his comments about guidance, we do expect to see significant impacts for us on revenue and our margin structure and EBITDA, and we'll talk more about that on our next earnings call. But I think -- so there is a very direct benefit here for Circle. We think this is a hugely valuable platform for Circle.

And then secondly, the whole purpose of this is to create an infrastructure where stablecoin native finance, not just payments but capital markets and all other financial applications depend on stablecoins. And so the successful adoption of Arc network, including through the benefit of the Arc token has a huge flywheel effect onto our stablecoin network and our digital assets and into CPN and other parts of the Circle business where we derive significant revenue and have emerging revenue streams as well.

And I'll just add one thing on to that, which, as Jeremy said at the end, this is all additive for Circle. You talked about a tension. We don't see it as a tension. We see this as an incredible value growth opportunity, right? Arc is a flywheel business, which powers our USDC digital and other digital assets business, which themself power CPN and Circle's shareholders retain value in that, not only through the growth in those businesses, but also through Circle's participation in Arc token.

That's super helpful. And Jeremy, to your point about attracting developers, building on these applications across the full stack. You're increasingly hearing about a number of players building point solutions at different points of the stack, but Circle having the full array here. It seems like a significant competitive advantage. Just wondering if you could elaborate on having full stack versus point solution and how that makes you -- makes Circle more competitive for the rollout here.

I can happily comment on that. I think whether you're a financial institution or your enterprise or your start-up and you're looking at this, the full stock makes a huge difference. Having a foundational core operating infrastructure that is simple to adopt, stablecoin-native with very high performance is key we're layering on top of that the most widely adopted interoperability technology with CCTP, which we're opening up to other asset issuers as well. That means that if you're building applications, they can work -- the value exchange can work seamlessly across other apps on other networks, the developer tooling, our wallets tooling and now with our agentic stack, literally developers can accelerate time to solution incredibly fast.

If any of you who are listening use Claude, Claude Code, any of these tools, I highly encourage you to go to agents.circle.com. -- just to see for yourself how incredibly powerful this is. And so I think we are building the developer platforms. We're building the operating platforms. We're building the higher-level services, infrastructures and protocols and we're bringing the world's leading digital assets in dollars, euros, money markets. And with the new Bitcoin assets or BTC, we think we'll have the opportunity to build one of the leading programmable Bitcoin assets as well.

So that whole capability, we think, is significant and certainly highly differentiated for developers who are trying to think about building in this ecosystem.

Your next question comes from the line of Owen Lo from Clear Street.

Going back to Arc, could you please give us an example when Arc token is created, how it will impact the revenue in other revenue line items. So for example, when $100 million of Arc token is created, how much revenue would you book in other revenue? How does the financial work?

Yes. Owen, thank you for the question. I'll take that. I'll just give a very brief overview of the impact of the future Arc token kind of on the financial statements and then specifically to the piece you just talked about sort of when Arc token is created. The Arc tokens will be held on Circle's balance sheet at cost, which is 0, right? When we then complete the obligations under token presale we will then recognize the value of those tokens as other revenue. And that value will then just drop down to RLDC and adjusted EBITDA.

Got it. And then could you please remind us the benefits of using Arc Layer 1 over the layer network? So some networks are mainly used for payments. Some networks are used for lending, it is Arc that your vision mainly used in payment well or capital market transaction settlement rails or like tokenization rail. More color would be helpful.

Sure. I'll happily take that. Arc is designed as a general purpose horizontal economic operating system. We believe that economic activity, lots of forms of it, whether that be payment activity, financial services products, capital markets activity, agentic activity are going to run on these economic operating systems. And increasingly, these economic operating systems and the apps that run on them will be powered by software machines that are generally AI agents are authored with AI.

So we think that's the paradigm of the future. When you look at just, for example, some of the firms that are participating in the Arc token presale, world-leading asset issuers on the asset management side and private credit, traditional ETFs. You see global systemically important banks investing in this, who are looking at this in payments and capital markets and FX. What we have seen is through the design partners that we've worked with, and we've talked about the hundreds of design partners involved. It really is spanning a number of areas.

So one is we expect that ARC will be the very best infrastructure in the world for USDC liquidity, interoperability and payments. So just straight away, this is going to be the best settlement infrastructure in the world for stablecoins, not just USDC but other stablecoins.

Second, a number of the things that we've built here, a number of the key features that we've built with Arc are very specifically designed for regulated banks capital markets participants, assurances that they need at an operational compliance and security level to be able to operate. And so we expect to see banks moving things like tokenized repo or applications like intraday effects running on these networks.

We have designed Arc with asset issuers as a central use case. And so if you're an asset issuer, whether that's tokenized stock, tokenized funds, other tokenized currencies, issuing on Arc will give you the benefits of the performance and security and privacy features, but it also gives you liquidity against USDC and it gives you distribution through our interoperability infrastructure. So I could say tokenize a fund and have that tokenized fund, not just be distributed on an arc, but through CCPP, make it available for use across other networks whether it's other apps that you might want your tokenized fund to get into. And so it's really a liquidity and distribution hub for asset issuers.

So it really is a full spectrum platform and then I would just say, it goes without saying USDC and Circle's infrastructure is widely used in digital asset markets today, whether that's with exchanges, onchain D5 protocols, Neo banks building in the Web 3 space, and we expect to see it widely adopted across that entire ecosystem as well from day 1.

Your next question comes from the line of John Todaro from [indiscernible]

Congrats on the product rollout is impressive to see. I guess, just first, kind of going back to Arc. So we had seen some of the token sales [indiscernible] you had presales when you had a series of of other sales, and you would usually see that fully valuation kind of step up materially each time. I guess just wondering then do we expect other token sales to be then more broadly distributed? And then if I -- I'm just checking my math, so you have $750 million in tokens right now on Circle. I guess if we do just see that fully diluted valuation start to ratchet up, it can be quite a bit. So just, I guess, trying to understand the kind of the plans for the rollout broadly and what that looks like.

Yes. I mean really, all I can say here is we have conducted this Arc token presale with the $3 billion FTV, the $222 million raise. And we have obligations to ultimately distribute tokens to those presale participants. But our core focus is really getting Arc Main Net launched, which is coming soon. driving the utility and growth on the network. And then ultimately, the ARC token plays a very important role in utility, in governance, in staking, in security as the network scales out. And -- what we did share in the Arc took and white paper is there is 60% of the tokens really designed for ecosystem grants, air drops, other incentive programs that ultimately circle and the broader community over time would be interested in seeing. And so there are future opportunities, obviously, for how Arc token is deployed, especially out of that 60% of the Arc token genesis.

Understood. Okay. So it sounds like there's a wide array of how those tokens can ultimately be distributed? And then I have a follow-up. Jeremy, you mentioned earlier on the call around the new Bitcoin asset products. I think in reference to the AVA-led attack within [indiscernible], I guess just wondering -- in your view, is there kind of been shaking confidence in the DFI ecosystem and how these product rollouts ultimately might solve some of the concerns in these [indiscernible].

Yes. I mean a couple of things just to set the record straight. There was no attack on [ Ave ]. There was a breach of an interoperability infrastructure company who -- other products depended on, and it appears that, that interoperability company's technology was their core systems were hacked by North Korea. And then that was then exploited through other D5 protocols. The protocols themselves were utilized by the bad actors, but the protocols themselves didn't break per se. Ave itself we think, remains a very significant and important on chain lending protocol and platform.

And as we publicly disclosed, Circle made a purchase of Ave tokens itself as part of our continued support for that ecosystem. What I would say, though, is that the models for onchain borrowing, lending and other kind of financial market primitives continued to grow. With Arc, we are working with other key players in the ecosystem to build institutionally ready onchain protocols.

So protocols that have kind of institutional participants, institutional curation of vaults and in some cases, like our stablecoin FX liquidity environment, institutional permissioning against them. And so executing code and smart contracts on blockchain operating systems is just part of the future. It's happening now at scale. It's part of the future. I think a key lesson here is that we're looking at an industry that has not had a lot of its own explicit regulation. And I think there are very clearly great opportunities for SRO-type structures because this is global. It's not just national.

There are clearly lessons here in terms of use information security and the like. Some of the things that we've heard about that have gone on with some of these projects are astounding. And so the kinds of control structures that a company like Circle adopts as central to being a regulated company, we think those kinds of control structures are important for onchain protocols, applications and services as well. And so I think we'll continue to see a leveling up in that kind of activity.

Your next question comes from the line of Joseph Vafi from Canaccord Genuity.

Just a terrific progress here, exciting set up on a lot of fronts moving forward. Just -- maybe just one more here on Arc on maybe the kind of layer 1 competitive landscape. I think there's maybe a couple of other big L1s that are getting stood up for real [indiscernible] applications. I know you're super validator, I think, over on Canton. I'm just wondering how maybe you kind of compare and contrast, if you're really a competitor against some of these other L1s or you're working together to kind of bring more and more traditional volumes onchain? And I have a quick follow-up.

Yes, sure. So a couple of key things. I think the first is that our stable coin network, which includes our digital assets like USDC, USYC, et cetera, are really market neutral and platform neutral. USDC now operates on 34 different blockchain network platforms. CCTP is connected to many of these networks. And so providing the most liquid, reliable, well-regulated digital dollar to every important platform in the world is a priority for us. Ensuring interoperability is a huge priority for us. And so that remains the case. And so that layer of what Circle does. That's central part of what we do is there.

And yes, in that example, we do participate on Canton and we are providing that CCTP connectivity into that network as well. At the same time, we very clearly have seen that we're kind of going from like the pre-iPhone era of blockchain networks where mobile operating systems, for example, there are dozens of them, lots of people trying stuff and we're going to, at some point, hit a kind of inflection point here where these new platforms that are designed for mainstream scale adoption that are wonderful to build with for developers and build and enable delightful user experiences across a huge range of apps. Those are emerging. And we think Arc has the potential very much to be one of those.

And so at that layer in competing for these new kinds of operating systems, we think we're going to be very competitive we think we're going to attract the world's leading institutions. You've already seen that in the design partners. You've seen that in some of the participants that are becoming stakeholders in Arc just announced today. And so in our view, this kind of convergence of AI operating systems and economic operating systems that are coming together at this time is going to reshape the nature, not just the financial markets but of the entire global economic system, that is a 5- to 10-year megatrend. We are putting ourselves right in the center of it and right in front with the technology and tooling. And so we expect to compete and win in that space.

At the same time, last comment here is that interoperability is a central theme of ARC. We want companies that issue on Arc to know that if they issue on Arc, they can leverage CCTP to bring their assets to something like Canton or bring their assets to Ethereum or Base or Solana or other networks, and that's important, too, because there's going to be many apps built on many platforms, and that cross-platform reach and interoperability, I know is top of mind for almost every firm that's thinking about how they build in the space.

Sure. That's great color. And then just on the Kyriba and other treasury management strategy seems like a great distribution channel there into the corporate market for U.S. Do you think the treasury management distribution channel is going to be the key driver here? Or is there something else we should be looking at in terms of corporate USDC balance sheet adoption?

It's a great question. Look, as a corporate CFO, and I talk to a lot of CFOs out there, we all know the benefits of stable coins and stable coin rails, right? And we're all looking forward to a world when we can easily use these and when they're integrated into our existing systems and control infrastructure, right? So the landmark treasury management services providers and systems providers like Kyriba integrating into USDC is both a necessary step to that mainstream adoption, but also a really exciting one, given Kyriba is one of the leaders in this space. We see and expect all of them to integrate USDC in these capabilities over time.

Your next question comes from the line of Dan Dolev from Mizuho

I have a quick question and a quick follow-up. Nice results here. I did notice your comments on the modest pullback in certain highly incentivized channels, which helped you with the RLDC margin. Can you maybe -- this is probably Binance and the question I have is, is this a positive and neutral? And then I have a quick follow-up.

Without commenting on which channels and as we've said before, we have many, many partners. I don't think we see it as a positive or a negative, right? In any one quarter, there are puts and there are takes, and we've said that consistently, and we've seen that in our numbers consistently since we've been public. So we're happy with where we are for our guidance for the full year.

Makes a lot of sense. And then my quick follow-up is it looks like the USDC on platform growth was really stellar this quarter. Maybe just a comment on what's driving that and how we should think about that because it's obviously like a big positive.

Sure. I'm happy to take that. Look, we continue to partner with more and more firms that are building on our infrastructure and taking advantage of our wallets and custody technology and our developer tools. And so as we just keep building more partnerships, we have the opportunity to grow that on platform. As a market-neutral infrastructure company and obviously now with for example, Circle Agent Stack that builds on our wallet stack that builds on our Circle Gateway product and other things, agentic activity and developers building AI automated applications on our infrastructure that has the potential to drive on platform growth as well.

So we continue to just invest in the best infrastructure possible. So people who are building on Circle get the benefits of that, and that, that grows our footprint in the ecosystem as a whole.

Your next question comes from the line of Jeff Cantwell from Seaport Research.

I wanted to follow up on some of the comments on USDC and circulation. You said it was flat sequentially and ended the quarter at $77 billion. Maybe just talk more about what you saw during the quarter because the onchain data had the high, I think it was above $79 million, but that seems to have tampered. Was that because of broader macro concerns? Or was there anything else to call out that you're seeing in the quarter?

Yes. I'm happy to take that. I mean, a couple of things I'd say. First, as we've talked about, right, there's a reason we don't guide specifically on like what circulation is in a quarter or even specifically what circulation is in a year. We look at the ongoing kind of CAGRs and what that growth looks like. And we have seen, if you look back over time, lots of ebbs, flows, sideways, spiked growth, other things. And there are always macro considerations, sort of global macro considerations that have to do with the price and velocity of money that have to do with the macro circumstances that affect market that in fact, the psychology of markets. And then you also have, at times, kind of activities that are sort of endogenous to the digital asset ecosystem.

And so I think we're sort of a tale of 2 worlds. On the one hand, digital asset markets, transaction volumes in the big exchanges was down significantly. Prices have been down significantly, but stablecoins really held up. And so it's remarkable that we have -- we saw the market grow 32% year-on-year, Circle around 30% as well. And then in the period, you saw some deleveraging that happened in Q4. You saw some deleveraging that happened in the context of some of these effectively hacks that happened, people suffered losses and that causes some deleveraging.

So you have some endogenous sort of variables that come from time to time. As a company, right, we've seen this over and over. We stepped back, we look at the fundamentals of are people building more applications, is it driving more transaction volume, or more and more use cases and institutions coming on board, is regulatory clarity providing the tailwinds that we need, is the actual technology effectiveness getting better and better, and all of those things are very strong right now, which is one of the reasons why we continue to be optimistic about this view that over the coming years, this could grow to the trillions of dollars of stablecoin money and regulated digital dollars that are in circulation around the world, and that's the world that we're building for.

Small point on to that, while we're very optimistic about the future. Even though quarter-on-quarter, circulation was flattish. I just redraw everyone's attention to the fact that you can see very much that USDC is taking share in actual onchain transaction usage, whoever is providing the data so much so that USDC took a majority of utility share this quarter. And that's a very important trend when you look to the future and the mainstreaming of these technologies.

Yes. Yes. That's very helpful color. And then I wanted to follow up on Ken's question on -- just if you can provide very understanding in terms of the cover. I guess beyond the 0 cost in weeks not the appreciate in -- would there be drivers that generate are for any part in other revenue just of the nature where you could potentially generate transaction revenue, maybe some spread on the trading of the tokens question. I'm just curious if you could

Jeff, you were breaking up a bit on that. If you could try and repeat the question one more time, we'll give it a shot.

Sure. Just hoping you could conceptualize the other revenue line as far as the Arc token, what the main components would be is a follow-on to Owen's question where he was discussing cost structure, which would get monetized through the presale of the token. I'm curious if there's a potential for transaction revenue and/or spread from trading. I'm just curious if you could kind of parse that out for us and help us conceptualize online for the Arc circuit.

Got it. Yes. Got it. There's several different potential impacts from future Arc token on other revenue. The first is one we've already touched upon, which is if Circle sells or tokens as we have just conducted a presale, the value of that will drop through to other revenue. And obviously, all of these tokens are on Circle's balance sheet, and that's a particularly large asset creation that we've had there.

Secondly, Arc token opens up a surface area, as Jeremy mentioned earlier, for driving growth in Arc network incentive schemes that we've seen across many different Layer 1 blockchains. If Circle gives an incentive grant typically with some kind of performance condition in the future. The value of that grant will first be recognized in other revenue, recognizing the value created and also then a corresponding other costs recognizing that the tokens have been given away in an incentive grant. And then finally, Arc opens up another surface area for alternative or revenue streams such as running a validator on the Hawk network, which will provide direct other revenue streams for Circle. Obviously, that's just one, and we will talk about more when the time is right.

That's all the time we have for our Q&A session. I will now turn the call back to Scott Blair for closing remarks.

Thanks, operator. For those we couldn't get to on the call, we'll happily find time to follow up. Again, we'd like to thank you for your attention and participation this morning and look forward to connecting soon.

This concludes today's call. Thank you for attending. You may now disconnect.

All right. We are continuing here at Canaccord's Sixth Annual Digital Assets Symposium. And up next, we are very, very pleased to have our keynote session of day 2. And that keynote is with Jeremy Allaire, who is the Chairman and CEO of Circle. Many of you clearly know who Circle is and know the investment case here. But for those very few that may not, Circle is one of the true juggernauts in the broader digital asset ecosystem, and it is the leading global issuer of compliant stablecoins. The company's USDC stablecoins are true digital dollars, tokenized and fully reserved and which can move across blockchains and the international instantaneously and pretty much frictionlessly.

This is a major distinction and upgrade from electronic money, which has been with us for a very long time and hasn't changed much in 40 years. We think of stablecoins as a true programmable money layer for the Internet and where honestly, the TAM is broader -- where the TAM is really honestly a broader M2 money supply over time, which in the U.S. stands at $22 trillion. Against this backdrop, we like Circle's competitive positioning in what might be one of the last major addressable markets that has not been truly disrupted by advancing technology over the next -- over the past 10 to 15 years.

There are a lot of big companies out there looking at launching stablecoins. Some may come from the e-commerce world, some may come from social media, some may come from TradFi. But all of these players have existing businesses and in contrast, Circle is a pureplay in stablecoins with no ulterior motives other than USDC and the broader stablecoin market. So therefore, we view Circle as the Switzerland of stablecoins, which I think makes them a #1 choice when people are contemplating adoption of stablecoins. In contrast, and I'm going to ask Jeremy this in a little while here, would Amazon really want to accept a Walmart stablecoin? They may have to if they're compliant, but it doesn't seem like a natural partnership there.

So I could go on for a while. But with that not so short introduction, welcome, and thank you for being with us here today, Jeremy.

Thanks, Joe. I'm very, very happy to have the conversation and be with you guys for this event.

Great. So maybe we'll just do a 2-minute quick intro, and then we'll jump into some more detailed questions. Intro on Circle?

Yes, sounds good. Yes. So I'm Jeremy Allaire, Co-Founder, Chairman and CEO of Circle. And Circle got started 13 years ago at really the inception of blockchain technology. And we have -- we were animated by a vision that over time that the technology of blockchains would allow us to build a protocol for dollars on the Internet and this would ultimately be protocols like we have for the web or for software delivery or for communications on the Internet and that would become possible that we could take dollars, fully reserved dollars and not fractionally reserved dollars and allow them to work on the Internet in an open, interoperable way and ultimately drive the cost of storing and moving value down to effectively 0, kind of commoditizing payment utility.

We spent a number of years building towards that, working with governments, policymakers, regulators around the world, working with banks, other leading financial institutions to build up that infrastructure and that led to the development of our flagship product, USDC, which launched 8 years ago. And USDC had its start in the digital asset markets and is now really expanding into a really wide array of use cases from cross-border settlements for enterprises to infrastructure inside some of the leading payment companies of the world to being used as collateral and capital markets transactions in trading markets in various types of e-commerce transactions.

And more recently, we're seeing USDC and related infrastructure being used by AI agents, which have started to proliferate even in the recent quarter. Circle has always been focused on being trusted, transparent, compliant, having good governance. That has set us apart. That has allowed us to work with the world's leading institutions. And we're -- we've been the first company registered and regulated in many, many markets around the world. The last thing I'll say with this intro is over the past 1.5 years, Circle has really been broadening out our platform. And so today, Circle really is an Internet financial platform company.

We're building operating system technology with Arc, which is an operating system layer for the future economic and financial system on the Internet. We have a digital asset layer, which includes not just our stablecoin network with USDC, but it also includes EURC, the world's largest euro stablecoin, USYC, which is one of the very largest tokenized treasury and money market products in the world and other infrastructure. And then up the stack, we're building applications that benefit from all this. So Circle Payments Network, which we call CPN is an application utility that's being used by over 50 financial institutions and growing to create a compliant, easy way to move money globally using the power of stablecoins as a settlement technology. So we've really broadened out what we do, and that's a little bit about the company.

I think it's more than a little bit, Jeremy. It's a great technology platform. Most people just see USDC, but the ecosystem is big. It's providing a lot of people the ability to build and to make their own use cases from USDC. And it feels like you're just starting on that journey.

That's for sure.

Yes. So I just wanted to go back and I think for the benefit of people, and this kind of took like a minute for me to sink in when I was first learning the Circle story, and I have a fintech background. The difference between digital money, programmable money and what we call electronic money today. My analogy is if you use your PayPal or something on a website to do e-commerce, you're still drilling a portal back into old kind of established antiquated payment systems, even though you're on the Internet. It's really just kind of virtual representation of old school money. It's not really programmable. It is just what -- it was a nice little step forward. But I think that is truly not what stablecoins are. That's truly a programmable money layer. I'd just love for you to kind of provide your own differences between the 2 for people.

Yes. I mean, look, I think most of what we experience as sort of this electronic money or software-based money today is sort of lipstick on a pig as we say, it's sort of a user experience, a decorative user experience on top of an existing old plumbing. And I think when we started Circle, we really started taking first principles. How do we have a dollar, the safest form of dollar that we can come up with, which would be something that's as close as possible to like a government obligation dollar. And how do we actually represent that as a digital asset, that is a digital bearer instrument, like digital cash that can free circulate on the Internet.

So really getting to the base layer of money and expression of the base layer of money where that expression has a native Internet infrastructure layer behind it. And this is similar when we sort of had -- people had -- if you remember, satellite radio was digital satellite radio or your cable video-on-demand was digital cable or there are 500 channels of digital satellite. It was digital, meaning it happened to use binary. But when we really think about what digital media was, it was when the actual physical manifestation of a song, of a movie, of a document actually became things, artifacts on the Internet that can run over open protocols on the Internet that have the total reach of the Internet and ran over open networks. That's what made those different.

And that's really what we saw when we started Circle. We could get at that base layer and then from the ground up, build up other aspects of the financial system. And that's where the programmability came in. I think the insight that we had 13 years ago -- when we were getting started, there was this idea of programmable money. There was this idea that blockchain networks would become computer networks. They'd become computing platforms. They'd be operating system like technologies that didn't exist then. The idea of a smart contract was sketched out on a napkin at that point in time.

But I had spent my career working on a lot of different Internet technology stacks, including programming languages, virtual machines, application servers, core infrastructure. And I could see clearly the power of a compute engine that could run on these cryptographic computing systems. And what that would allow for over time is a composable programmable financial system. You'd have a base layer of ultrasafe digital cash money and you'd have the ability to write software that could build higher-level abstractions, whether that be a loan, a trade, a bond, all the kind of financial primitives that are there.

And we've seen versions of that really happen through DeFi. We've seen software machines that create options markets, derivatives markets that enable people to issue and tokenize credit and other things on these models. But I think really, we've reached a point where this was, in many ways, like an early adopter technology, experimental, but obviously still sizable. And we finally got, I think, the kind of legal and regulatory clarity around the world, not just in the U.S. that's now making this a kind of more hardened part of the global financial system.

That's great. That's a great overview and explanation. I like the kind of digitization analogies to other assets that have been truly digitized. And I think that programmable ability is something that's exciting, especially, as you mentioned, at that intersection of potentially agentic AI and stablecoins, which we are going to get to in a minute. But I also wanted to just at a high level, kind of ping you on what you think the TAM is here. I mean, if you think old electronic money is M2, and this is a newer version of M2 because it's really programmable and it's just as reserved, I mean -- it is money that's fully reserved. Do you see M2 as the TAM here? Is that the TAM? Or is it a piece of M2? Or how do you view that?

There's a few different pieces that we look at. And again, you have to kind of expand across the full suite of what Circle is doing to capture that. So the first is global money supply is, I think, around $120 trillion in value. And you have M1, you have M2. And what's interesting about it is most of M2 is credit. It's credit money. It's essentially kind of leveraged credit money. And I'll come back to that because I view that as part of the TAM. There's a huge portion, and it's estimated around $60 trillion of that money supply is in the form of either physical cash or noninterest-bearing demand deposits. So essentially payment money, working capital money in accounts all around the world.

Stablecoin money immediately most significantly addresses that $60 trillion, right? So working capital money, payment money that exists in the world, but a far more high utility version of that, that runs natively on the Internet. But when we think about that total TAM, whether it's the $120 trillion or the $60 trillion that's there, there's sort of the money stock itself, which is one dimension of the TAM. And then there's all of the different utilities that utilize that. So those utilities include all of the exchanges that we have in the world.

They include every payment system that we have, every payment utility and payment application, that includes the card networks or other payment schemes, B2B payment infrastructure products, all the different utilities from capital markets infrastructure all the way down kind of transform, move and use that money and extract fees. And so within the world of the utility that gets wrapped around that money, there's also an enormous TAM. And so our view is that more and more of the money stock will become truly digital currency native, and that will just grow over time. And more and more of the utilities for how that money is used will become software native, will become Internet native and will be delivered far more efficiently globally, et cetera.

And so it's both of those together that really represents the TAM that not just Circle can fulfill, but the entire ecosystem that works with this technology can fulfill. Like there are going to be lots of different players that transform, whether it's the NASDAQ moving to tokenized equities and blockchain-based systems and sort of changing the way in which equity capital markets work to utilize stablecoin money, tokenized equities, et cetera. So there's going to be a lot of transitions that happen just like we've seen in whether it be enterprise software moving to the Internet or communication services moving to the Internet, these kind of migrations of these established utilities to more Internet native delivery.

So the TAM really encompasses both of those and that -- and I think that's significant. And then for Circle specifically, we're playing in the application utility space with CPN. We're building a generalized payment network utility that is designed for financial institutions to utilize that. We're building the money layer across a number of different core monetary assets, key reserve currencies, treasury money, kind of T-bill money, and we're building operating system technology. And I think this is one of the most exciting areas, which is -- there is this new paradigm of economic operating systems.

And these are an evolution of blockchains to provide an environment where economic activity can be expressed, executed, coordinated in a tamper-resistant way. And these economic operating systems will have significant fee revenue attached to them and other monetization opportunities as well. And we're going very aggressively into that space with the development of Arc. And so we're going to play at this fundamental infrastructure layer. So that's part of our TAM in the actual digital money layer, which is the money stock of this and at the application utility layer, which we think can be significant over time as well.

That's great. Updates my view on the TAM. So that's great. Thank you, Jeremy. So yes, so we've got this money layer, and we've mentioned Arc and CPN a little bit. But what -- stablecoins can move around on other blockchains today. Clearly, Ethereum holds a lot of the stablecoin volume globally. But what -- but Arc is an L1 that's being purpose-built, I believe, to drive transaction volume. It is an infrastructure layer of what could be a much larger base of economic activity. Can you just go into the vision on Arc and how it potentially evolves over time?

Sure. So the first thing I'd say, just to connect to one of the things that you were noting is that our stablecoin network today operates as of today, I believe, on 32 different blockchain networks. So we are the most portable cross-platform stablecoin network in the world. We've prioritized interoperability as a huge thing. And that means if there's a new network with new users, with new applications, with new utility, we want to make sure that our digital dollars and our protocols work there. And so we continue to do that, and that's been significant, and we work with all of these different ecosystems. And so that's one piece.

At the same time, as we've engaged with the market over the past number of years and as major -- we've engaged with major institutions, global systemically important banks, clearing houses, global custodians, the largest asset issuers and asset managers in the world, the firms that run payment systems like Visa or Mastercard as well as governments and government regulators. What we have found is that the kind of early adopter phase of these blockchain networks was not necessarily suited to the needs of the mainstream scaling phase. And that there's a whole set of things that those types of institutions really need if they're going to migrate their activity entirely on to these networks.

And so we looked at that, and we saw that Circle as a kind of market-neutral infrastructure company that's learned a lot about the use cases are for real-world financial activity. We were in a very interesting place to be able to go into this market. So both through organic R&D, multiple acquisitions, we've built this up. We launched Arc in test phase in October with over 100 major companies, including Goldman Sachs, Deutsche Bank, Visa, Mastercard and so many other incredible companies. And we're moving towards what's called Mainnet launch, which is the kind of full commercial launch.

And I think for us, though, the vision is as an economic operating system, these networks are going to need to support a lot of different activity. So what is that? Well, of course, it needs to support the movement and transactions of things like digital dollars. But these also need to be kind of economical platforms for firms that want to issue digital token-based versions of their own assets. It needs to be a canonical platform for a bank issuing a tokenized deposit for an asset manager that's issuing tokenized funds, for equity issuers, for credit funds, for so many different forms of assets that exist in the world.

So we've built fundamental infrastructure at the core that is for those types of issuers. It needs to be run as a network that is not a decentralized anonymous system, which is the way most -- excuse me, the way that most of these networks have been run, it actually needs to be a network where the firms that operate the network are known that they're held to very high standards of information security, compliance, operations, et cetera. And so the network is a network where the operators of the infrastructure are known, and those operators are ultimately serious financial institutions, serious financial infrastructure companies.

It's a very different model than the kind of decentralized, let's build something that is away from government. Here, we're working with a global base of firms who can operate with this and that can uphold the standards that a major banking regulator would say, yes, you can put real money and real transactions on this. So we've taken that approach, which is different. And then the longer-term vision here is as more and more forms of assets and financial contracts move on to these systems, this will extend more deeply into corporations themselves.

Just like corporations went through the process of being an off-line company to being an online company where they rewired their business processes using software that faced customers on the Internet, there was a whole transition that took 10 or 15 years, we're going to go through the same transformation. Corporations are going to move from being sort of online to being on chain. More and more of the things that are economic in nature, the treasury management of the company, the contracts of the company, the economic contracts of the company, the -- all of the financial activity of the company, the governance and voting that's involved in companies, all of those things are going to move on chain, and you'll have more digitally native corporations.

And increasingly, and this touches on the Agentic and AI side of this. Increasingly, these corporations that move on chain, the primary units of labor are going to be AI agents. We expect that the vast majority of work that is executed in the real economy is going to be work, in particular, in certain industries, but it will be work conducted by AI agents. And those AI agents are going to need economic tools, they're going to need to have the ability to make and receive payments, you're going to need to be able to compensate external AI agents that are doing work on your behalf and have contractual arrangements with them. So this whole migration to an economic Internet is what we're going after with Arc.

That is -- that's a great explanation, and I learned a lot right there, Jeremy, myself. And I think that goes back to your earlier comments that you're a technology platform. Everyone is kind of focused on USDC and what USDC in circulation is right now. But that is -- I've been looking for, okay, how does TradFi really jump into the world of digital assets? Like is it clarity and then they're going to move in? How much can the big juggernauts in the sector move the sector forward by themselves, yourselves, other big players like Coinbase, doing a great job, but everybody else is not there yet from the TradFi world.

And so it feels like that explanation you just -- or the illustrations of what Arc could be well beyond just applications related to stable -- your stablecoin, right, to a much broader tokenization effort of a lot of things, right, is like the first thing I've seen in a while that is, okay, this is a real tip of the spear for a broader economic migration. So that was really great to hear. So on that note, I mean, it's an ambitious. I mean, clearly, you've got -- you have the blockchain expertise, you've got the regulatory expertise, you've got the stablecoin expertise to envision and implement something like Arc. Is there -- are there other Arcs that people are working on that you're aware of out in the world that are similar in terms of their breadth and depth of capability to move the world towards more of a tokenized and agentic world? It's pretty interesting.

Yes. I mean, look, I think a couple of thoughts. I think the first is that the evolution of blockchain technology, in some ways, mirrors the evolution of things like mobile. If we -- I use that as a reference point because we can all remember, for example, like 15 years in the desert where -- like there was a new mobile platform coming out like every year, there was the PalmPilot, there was the compact iPack, there was the Windows phone, there was the Symbian phones, the BlackBerries, the NTTs, Smartphones, like all this stuff. And we watched as that evolved. And everyone was always so excited about the promise of mobile.

And -- like 100,000 people get together every year in Barcelona, go to Mobile World Congress and they'd be all showing off like, look, you can do a mobile game or look, you can do -- you can like -- you can use this for your inventory tracking or whatever it was. And the reality was it was total c***. None of it worked. It was a really bad experience. The tooling, the user experience was poor. And these were huge companies, Nokia, Samsung, NTT, Microsoft, pouring billions of dollars into this bet that these platforms were going to become significant, right?

But it really took -- there were multiple things that happened simultaneously, including iOS, including Android and really a convergence of technology forces that had to do with kind of capabilities of hardware, had to do with capabilities of software, how that got put together, and you hit this inflection point. And you all of a sudden had kind of an open stack that really enabled a surface area that people could innovate on and people didn't even know what you're going to be able to create. That was the amazing thing is that we went from like all these ideas about what mobile could be to this explosion of millions of apps that were there.

Now I think we're sort of going through a similar transformation right now. And so to answer your question more directly, of course, there are others that are trying to think about this next generation of economic operating system that takes blockchain technology from an early adopter phenomenon to a mainstream scale phenomenon that penetrates the entire global economic and financial system. The opportunity is enormous. And I think when we think about Arc, we really think about it -- in some ways, it's a little bit like our Android, right?

We're bringing it into the world. It's an open source technology. We're building the fundamental references, but then we're bringing in a huge ecosystem around it. We're bringing in the ecosystem across all the different categories of firms that would benefit from it. And we ultimately want them to be stakeholders. We want them to participate in governance. We want this to be a real ecosystem play that's open and value creating for everyone who participates.

And so I haven't seen a project with the same sort of scope, ambition strategy approach, but that's not to say there won't be. I think in this area of agentic, I think there are a number of people, whether it's Circle, Stripe, Coinbase, Solana, others who have very quickly seen like, oh, this is here, it's happening, it's fast. We've been working on stuff in this space for a while. But now it's kind of -- it's caught a groove as we've entered 2026.

That's great. And I like that surface area analogy. Arc is that big surface area that was original iOS and Android, and no one knew what we were going to do with it yet, and it was definitely a lot better than that Palmpilot module for one specific application. People just should have been better off using paper, but everyone tried, right? So I do remember those days. So maybe we just kind of drill down a little bit on agentic. We've mentioned it a couple of times, but I think this is a nice area to talk about it because this Arc surface area is large. And I think there's probably been some early days experimentation with it.

It does feel like a lot of the big players in the space see this also as an opportunity, right, to drive things like payment volume, bring cost down, expand distribution. So just kind of how it works and -- but it clearly makes a lot of sense that if you have programmable money going back to stablecoins and USDC and you have an operating environment where agentic activity can occur and then you add programmable money together, it's a really nice combination and foster a lot of innovation?

Yes, that's exactly right. I think there are a lot of pieces to understand this. I think the first relates to what you just said, which is the building blocks. So what do these networks and forms of money provide? They provide a globally available, interoperable open system that software can interact with. They provide a layer that introduces kind of a proving system. This is really important. We need trust in AI, right? We need to be able to have assurances that the work that's being conducted is valid, that the transactions that are being performed are valid, that the identities that these AIs are representing can be proven.

And so we need these systems of kind of provers, which is what cryptographic networks give us, right? So there's like an underlying material there that's really, really important to AI, which for many people, one of the biggest concerns sort of is trust. Now it's also at a very basic kind of economic and technological layer that this is valuable as well. Hopefully, I don't have a cold.

Bless you.

Thank you. At a technology level, in a world of AI agents, there's one vantage point, which I think is kind of a looking-backwards vantage point. And there's another vantage point, which is a looking-forward vantage point. The looking backward vantage point is, I'm a person, I shop online, I want an AI to shop for me, and I want to empower it to go make those transactions on my behalf. That's looking backward, okay? That's useful. That will be something that happens. But that is not the big opportunity here.

For what it's worth, I think that credit cards will be stored and credentialed and AIs will have permission to use your cards and things like that. I think with the proliferation of stablecoin money and digital wallets that support stablecoin money, that will increasingly be utilized in those transactions over time as well. But again, that's -- in my view, that's a looking-backward view. The looking-forward view, which is the one I'm most excited about, is that AI agents, when you look at the phenomenon that's happening now with AI agents and you look at the work that's happening with Claude Code, Codex and OpenClaw, what's happening is that the units of work, the units of labor in corporations are being broken down into agentic tasks and workflows.

And the services that one might need to deliver something are being expressed more and more in AI agents. And you might have a legal AI agent, you might have an accounting AI agent, you might have a content creator AI agent, you may have a wide array of specialized tooling that is AI accessible and that is itself AI-based, and that whole system is going to involve value exchange. That whole system is going to require that AI is interacting with other AI in conducting transactions.

And when you start to get into that world, there is no other infrastructure in the world that can scale from a micro transaction to a macro billion transaction, right? There's no system in the world that can do that other than blockchain native stablecoin models. And that's very, very powerful. So the bet that we're making is that the number of agents that are active economically is going to grow into the billions and the payment volumes that are involved when you have agents conducting very high-frequency transactions.

Just think about this. If I'm an agent and I am going to go to another agent to conduct some work and that other agent is going to conduct work. And effectively, it's the amount of tokens that, that other agent consumes plus the value-added markup, whatever the margin is on that because of the value-added work that's happening there. That compensation might be work that costs $0.25. And the frequency of those transactions might be in the hundreds of millions of billions over time. And so you need an economic medium to do that.

And so we're building that. We're building that at the core. We're building and contributing to the standards that make that work. So it works interoperably across a lot of different systems. And I think that is where we're going. And so I think people don't typically look at the world through an exponential lens. It's very hard for the human brain to do that. We look at the world through a very linear lens at best. Many people can't even go linear. They're just like, now the world is what it is and it's just going to keep going like what it is. Linear feels like, wow, it's a lot of change. Exponential, we just -- our brains can't even go there. This is exponential technology right now.

And the acceleration that's happening from agentic is exponential. So when I think about a year from now, 2 years from now, 3 years from now, I imagine huge amounts of software machines, AI agents operating at scale in the real economy, economic operating systems as the backplane for that, stablecoin money as the value storage value transfer medium that works around the world. And when we think about -- if you're someone who's covered payments and people talk about what's your TPV numbers, what's TPV look like, what's your take rate look like, all this sort of stuff, I think a lot of that goes out the window. And TPV in this world will, in my view, likely be many, many orders of magnitude larger because the cost of transacting is approaching 0.

Last week, we announced something called Circle Nanopayments. And Circle Nanopayments is in a beta test right now and it creates a way for agents to be able to store value in a unified balance and to be able to -- using a protocol called x402, which is a protocol that allows agents to conduct transactions with other services on the Internet. It allows that stored value, that USDC stored value to be spent to any kind of app across about, I think, a dozen different blockchain networks and can be spent in less than a second with the transaction costs that can go as low as $1 million of a penny.

And so if you're talking about micro transactions with micro transaction costs that are basically from pools of value that AI agents are utilizing to interact with all these different services, that's the kind of infrastructure that you need. That's an infrastructure that will go live when Arc goes live. And so it's sort of a core primitive in the Arc infrastructure that we believe will be very helpful to all these agent deployments.

That's a lot to unpack, Jeremy. And I've been an analyst a long time, and I honestly haven't heard something as potentially compelling as that vision in quite a long time. So super exciting. Yes, my linear brain is kind of thinking, okay, this move forward with some genius was good and then clarity is good. My linear -- oh, yes, we're going to grow a little bit here and there because of these things. But it never really occurred to me that it could be -- it could just be AI that drives blockchain adoption and tokenization instead of the other way around, the tail wagging the dog here, dog maybe AI and the tail could be blockchain instead of the other way around?

Yes. We -- I'm a big believer as a kind of technology futurist and a technologist in general that -- the most exciting things happen when you have multiple compounding exponentials. Like that's when it gets really interesting. If you think about the iPhone, there was sort of -- yes, like hardware innovation was there, but it was sort of the adoption of cloud infrastructure on the back end, which was sort of the virtualization of what it took to deploy software. And it was the adoption of mobile broadband, so the CapEx spend that went into broadband, wireless broadband...

You have 4G for the first time to make it work, right?

Right. When you put together the hardware and the software, if you didn't have the cloud infrastructure that virtualized how fast and easy it was to build the back end of things, and if you didn't have the physical infrastructure at the wireless level, the radio level, if you didn't have all those together, those are like 3 compounding technologies that created the exponentials and explains also why prior versions of mobile didn't work. The hardware wasn't there. The capacity of the networks on the broadband side wasn't there. And it was hard to build services on the Internet. Cloud hadn't really emerged.

And so those compounding kind of exponentials are where you see things kind of have these different kind of liftoffs. And I think AI, crypto networks and blockchains, regulatory frameworks for how this can be used, these are all kind of connecting all at the same time and are creating, I believe, these kinds of compounding exponentials.

Right. The setup looks good. I agree. No doubt. there's so much to talk about, but I think maybe we checked the AI box a little bit here and so the vision here is compelling. So Arc, you're going to kind of open it up to big established players, your partners. Does it go to full live? Or is it incrementally live? Because I mean, the vision here is so -- it's ambitious, and it feels like it's more than a flip of the switch for the whole thing, right, because there's a lot going on, right?

Yes. I mean, there's a whole sequence of things, right? So as in Testnet, we've got very strong developer traction. We're working with all of the different players in the digital asset ecosystem to make sure that their products and services, whether you're a custodian or an exchange or a wallet or a developer tool company that your products are compatible with Arc. And so we're optimistic about having that kind of day 1, like turn it on and everybody can use it kind of thing.

The other is how do we make sure as an operating system, what you care about are what are the apps that are there on day 1. And so we want to make sure that some of the most popular apps that exist on chain today are there on day 1. And so we're working hard to make sure that we have that. And then there's the -- getting the kind of financial infrastructure partners to stand up and operate this and getting that -- going through a kind of live testing and operating cycle with those companies operating the infrastructure and essentially allowing anyone in the world the ability to test out a node to battle test the nodes, and that's an important step here as well.

And I think additionally, it's getting new things that are starting to come into the market like these tokenized real-world assets and use cases that are relevant to larger traditional financial institutions, getting those to be able to be live when we launch or shortly after when we launch and things like that. So that's the body of work that we're doing there, and we're making really good progress. And obviously, as more and more rolls out, we'll communicate that out to the public.

Very exciting, no doubt. So I'm going to go back to my linear brain and some more simple questions here, Jeremy, in the time that we have left. In my opening remarks, I kind of talked about the stablecoin wars. And if Amazon doesn't want to accept a Walmart stablecoin, I mean, if they're compliant, I guess you have to, but how do you -- is that -- maybe that analogy is too simple. And then relative to your position as kind of the Switzerland of stablecoins, do you see enterprises TradFi, e-commerce guys succeeding here? Or does their established kind of big business kind of just create resistance from their competitive cohorts for broad-based acceptance?

Yes. I think for us, and this has been something that I think we've sort of been consistent about, which is that stablecoins are network and platform businesses. They exist as network utilities. Those network utilities have platform characteristics, meaning developers build on the protocols of those networks. And when developers build and integrate their applications to those networks, it creates utility for the whole network. And so it's a classic platform developer flywheel model. And that creates very significant barriers to entry.

And so when we think about those for Circle, we have a very strong competitive position. We have the competitive position of having done the work of becoming the regulated infrastructure in all of the markets that matter around the world, and that's critical. We've done the work to build the financial infrastructure by working with leading financial firms around the world to plug in liquidity between global markets, regional banking systems and our network.

We've built the flywheels from a developer perspective, and that started 8 years ago and has grown where now if you're a developer and you're building a product and you want to support stablecoins, if you don't support USDC, you're at a competitive disadvantage because it's so interoperable, so many products supported. And so that's what you care about. You want your users to be able to -- if they have digital dollars to be able to transact interoperably with as many people as possible. So we've created these very, very powerful network utility flywheels and those compound for us.

The vast majority of implementations USDC, we've never heard of. They've never talked to us. There's no business partnership. It's just they implement it because they need to because it has such reach. So you have that effect. Additionally, you have what we call liquidity network effects. Liquidity is so fundamental to this. Users need to know that they can create and redeem at scale anywhere in the world, and they can get it in and out of currency systems, financial systems all around the world and that the actual pipes, if you will, can carry a lot of value. If you don't have all those things, you're not building something useful.

And the marginal value of something that comes in that doesn't have those things is effectively 0. The final piece is that Circle, as you introduced in the beginning, we're a Switzerland. We're a market-neutral company. We're not an e-commerce company. We're not an exchange. We're not a brokerage. We're not a consumer payment application. We're not a payment service provider. We're not a bank. We are a market-neutral infrastructure and all of those types of firms are our customers. They all build upon us and can achieve their own goals by building upon us.

As soon as one of those types of companies tries to introduce their own stablecoin, they're immediately in conflict with all their competitive peers. And so the incentive to adopt that other product is very low, notwithstanding all the other things that I just talked about in terms of what those barriers look like. And so it shows up in the numbers. I think this was actually part of what we shared in our Q4 earnings was it shows up in the numbers. Over the last year, there have been many dollar stablecoins that have been introduced, regulated products.

But when you actually look at the liquidity, when you actually look at the transactions that happen, transaction volumes continue to grow. We've seen 250% year-over-year growth. There's some recent data out from third parties in the last week, which shows continued growth in transaction volumes. And USDC has continued to take market share. We're now the majority of transactions happening on chain, and that's been very strong growth to get there. But when you add together USDC and Tether in terms of actual transactions are happening with stablecoins on these networks, it's more than 99%.

And so if you add together all the other stablecoins that have launched and all of their transaction volume, it rounds to 0. It rounds to 0. And so the point here is that these network effects are strong. The utility is strong, and we feel very good about our position. And I think for us, there are going to be people that experiment because they think they have a big brand or they think that this is something closed loop that they can do. But at the end of the day, general purpose, market-neutral kind of public Internet infrastructure utilities for digital dollars are going to be a winner take most market structure. and we're well positioned in that.

And I feel good about from an investment perspective, what we're doing with the continued expansion of the liquidity, the availability, the continued types of major institutions that are integrating to our network, the advancements that we're making down the stack with Arc, up the stack with CPN, all of these things continue to contribute to the strength of our position. And so we pay attention to everything that happens. And obviously, I think when we were going through our IPO, one of the things that we talked about with you and others is in a winner-take-most-market structure, there's typically like 3 to 5 players. And we think we'll be one of those. We hope we'll be one of those. But there are going to be players that don't even exist today, right? They're not even in the market today. And so 3 to 5 years from now, there will be others, but we hope to be the most of the most.

Yes. I mean -- and I remember you saying the winner-take-most strategy, that was 9 months ago now. And no one else has really popped up yet. So the winner-take-most analogy is clearly still material. Maybe it's winner-take-most plus a little bit more potentially. We're almost out of time. Can the big banks make the pivot on this technology? Technology is hard. The banking philosophy and mindset is not necessarily incredibly innovative. They usually default in their technology to compliance and things like that. Do they cry uncle and just white label or partner? Or can they really kind of be part of this winner take a good chunk of the market at this early stage, especially when you think of this agentic layer getting added and what that may mean to acceleration and adoption of potentially more USDC?

I mean, my view is across the full spectrum, not just of using stablecoins as a payment system, but across the opportunities to offer financial assets and products on chain, the opportunities for banks are enormous. In fact, today, at Circle's global headquarters, we were hosting an event called Circle Current, and we've got roughly 100 top executives from the leading banks of the world and leading asset managers of the world. They're coming to engage with us around all of the different use cases that can be built out.

And I think whether it's the SEC, the CFTC, the prudential regulators, every single one of them in the United States is giving green lights. They're giving green lights that banks can go, they can implement this technology. There's more and more guidance coming out. There's a set of guidance from the SEC, which is in draft comment period amongst regulators, which will likely come out. The GENIUS Act as coming online. All of these things are happening. And so we are seeing banks and capital markets players all gearing up to build on this technology, which is very encouraging.

And our message is we can be a great infrastructure platform partner. Our message is we can provide a new payment and settlement layer that enhances the value proposition for your customers. And this is important because these institutions maintain relationships with households and they maintain relationships with corporations, and they need to provide the best service possible to those customers. And if part of that is adding new capabilities that allow those customers to do new things or to do things more cost effectively, that's a benefit to those customers.

And the forward-thinking financial institutions are going to embrace the fact that, hey, over here, we might make less fees, but we're going to retain our customers. And our core business of issuing credit or selling bonds or providing other forms of working capital or providing other transactional services or providing investment banking or all these things, these remain key. And in fact, in each of these areas, there's opportunities to enhance those with digital assets.

JPMorgan issued a commercial paper digital token bond and sold it -- it was entirely on chain. They sold it to the purchasers who purchased it with USDC. The proceeds of the USDC went to the issuer in USDC. It was an end-to-end USDC transaction with a digital token bond. It was like $100 million. Now the point is that all of this -- all the business practices can move to use this technology. And this is not like an existential thing. This is a -- if I was Fox or Time Warner or AT&T or Verizon or I was Oracle, and I was facing a rearchitecture on the Internet and I can either move fast or I can move slow or I can wait, and that will determine your ability to adapt to the new product delivery and unit economics of this new system.

Really exciting, Jeremy. We started the discussion over and talk to stablecoins. The discussion shifted to a much bigger and broader set of topics and really interesting to see this, as you would say, this huge surface area emerging at the intersection of a lot of things, blockchain, agentic AI, tokenization, really exciting times. And we really, really appreciate you being with us today. It was a great discussion, and I definitely learned a lot. So thank you very much.

Really my pleasure. Thanks for having me.

Thank you.

Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin and I will be your conference operator today. At this time, I would like to welcome everyone to the Circle Internet Group's Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions]

Thank you. I would now like to turn the call over to John Andrews, Vice President of Capital Markets and Investor Relations. Please go ahead.

Thank you, operator, and good morning. I'd like to welcome you to Circle's Fourth Quarter and Full Year 2025 Earnings Conference Call. I'm joined by Jeremy Allaire, our Co-Founder, Chief Executive Officer and Chairman; and Jeremy Fox-Geen, our Chief Financial Officer. Earlier this morning, we posted our earnings press release and earnings presentation on the Circle Investor Relations website, investor.circle.com. A transcript of this call will be posted on that website once available.

I do need to remind everyone that our earnings press release presentation and this call contain statements that are forward looking. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements.

Information concerning risks, uncertainties and other factors that could cause these results to differ is included in our SEC filings. We will also disclose non-GAAP financial measures on this call today. Definitions of those non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures can be found in the earnings release and earnings presentation, which are posted on Circle's Investor Relations website at investor.circle.com. Non-GAAP financial measures should be considered in addition to, not as a substitute for GAAP measures.

Now I'd like to turn the call over to Jeremy Allaire. Jeremy?

Thank you, John, and good morning, everyone. I want to start this morning talking a little bit about what I'm seeing in terms of this extraordinary transformation that's underway. I'm speaking not just about the changes we're seeing from blockchains and stablecoins, but the broader backdrop of technology acceleration, software-powered technology acceleration and artificial intelligence. I believe we are in the earliest stages of a very deep and very fundamental transformation of the way the global economic system functions and works. Not only will our global economic system become more internet native, but it's also going to become dramatically more automated. We are entering a world where, in my view, likely tens or hundreds of billions of AI agents will interact and perform economic functions over the Internet.

If we look at the past decades, we've seen this progression and this progression has been accelerating. This progression has been one where we build more and more software native infrastructure, more and more data and transactions on the Internet. The progression from the Internet of information into an Internet of software distribution, interactive media and commerce, all made possible to the adoption of web, cloud and mobile platforms has created extraordinary value over time. Beginning around 2013, we began to see another transition this time into the value era of the Internet where early blockchain platforms emerged. Later, through the innovation of fiat backed stablecoins, we saw the birth of a transformative Internet-native money layer.

Now as we've achieved regulatory clarity, and as the technology has matured, we're now seeing these developments directly colliding with another major platform shift, which is the adoption of AI platforms. This value era, this combination of economic operating systems and an Internet native money layer with artificial intelligence, agentic economic activity and automation, seems likely to drive the greatest acceleration of economic activity we've ever seen in human history, and we're really just at the beginning. Our aim at Circle has always been to build a new Internet financial system to build the software infrastructure that powers it, and we're more excited than ever to have that opportunity today.

Let's talk about our key highlights in Q4. Our stablecoin network continued to grow. We saw USDC end the year around $75 billion in circulation, up 72% year-on-year despite some of the declines that we saw in Q4 due to the crypto market correction. We also saw tremendous ongoing growth in the amount of transactions happening on our network with onchain USDC volume hitting nearly $12 trillion, representing 247% year-on-year growth. This continues to reflect the growing velocity and utility of digital dollars on the Internet. Q4 delivered very strong financial results. We realized $770 million in total revenue and reserve income in the quarter, up 77% year-on-year. Adjusted EBITDA for the quarter was $167 million, up 412% year-on-year, with an adjusted EBITDA margin of 54%. Overall, for the quarter, we had very strong yearly growth across the board.

Importantly, our platform continues to expand. We launched the Testnet of Arc, our Layer 1 blockchain network, and we're on track to launch Mainnet this year. Circle Payments Network continues to see very strong volume growth and participant expansion as we continue to see traction in real-world payments and cross-border settlements. We're also adding new products. We introduced StableFX in beta, our new onchain FX app and xReserve, which supports continued expansion of USDC across a wide range of blockchain ecosystems. And we now support USDC on over 30 different blockchain networks with interoperability being a key piece of Circle's platform strategy. Mainstream adoption continues to deepen across a broad range of leading enterprises and institutions. Intuit and Circle are partnering for Intuit to bring low-cost programmable money through Circle's technology to its millions of consumers and businesses.

Visa continues to expand its integration of Circle stablecoins, announcing the launch of USDC settlement that permits U.S. Visa card issuers and acquirers to settle outside of normal banking hours using USDC. And earlier this month, Circle and Polymarket, the largest prediction market in the world, announced a formal partnership where Polymarket will continue to advance its use of USDC as the core collateral and settlement asset for their markets, demonstrating our very strong position as the leading regulated stablecoin network.

Now these are just the tip of the iceberg. Major enterprises and financial institutions continue to integrate and support USDC in their businesses. We saw firms as diverse as Cash App, Gusto, Deal, interactive brokers, JPMorgan and Mastercard launched products and offerings that took advantage of USDC. Right now, we are seeing more activity from start-ups, enterprises and financial firms than we've ever seen in our history.

The stablecoin market continues to grow strongly, and our position in that market continues to strengthen as well. CFX stablecoins grew $85 billion in the year, with 46% year-on-year growth. Within that market, our competitive position remains strong, and we continue to maintain a significant share. Importantly, it's a market that, despite the efforts of many other firms to enter and compete is really a market of 2 major issuers. And this reflects the very durable network effects that we maintain that are significant barriers to entry and adoption. Looking at growth in actual transaction volumes, Circle's share of transaction volume grew from 39% in the third quarter to nearly 50% in the fourth quarter. This is based on Visa's published analysis, which works to eliminate internal transactions, exchange wallet rebalancing and bots to really capture the volume that better reflects real economic activity.

You can also note that while there have been a number of other stablecoins entering the market over the past year, their usage in real transactions is effectively 0. As noted in my introductory comments, Circle's network grew strongly with 3.5x year-on-year growth in onchain transaction volume and notably, CCTP, a critical infrastructure for interoperable usage of USDC, grew 3.7x year-over-year to over $41 billion of volume in the fourth quarter.

I know that competition is a major topic for many. So I want to talk again about the durable network effects that Circle maintains. Foundationally, Circle's competitive position has been built on trust, as an audited public company with a deep commitment to compliance, as a firm regulated across jurisdictions around the world and with the highest levels of transparency possible. We enjoy the trust of major financial institutions, payments companies, enterprises, developers and end users around the world. And that trust shows up in our fundamental liquidity with $75 billion of USDC in circulation an unmatched liquidity infrastructure that in Q4 supported $163 billion of minting and redemption volume. That minting and redemption, that promise to create and redeem a digital dollar one for one at scale and through banking systems around the world is completely unmatched by any other player in the market.

In Q4 '25, we saw distribution and network usage grow as noted, to nearly $12 trillion of onchain transaction volume, continued growth in meaningful wallets using USDC and our product platform continuing to expand. The breadth of infrastructure we provide, the breadth of liquidity services that we provide and with new applications like CPN and StableFX, our whole product platform is not something others in our market are able to replicate. And crucially, acting as a market-neutral infrastructure, not competing with our customers and our partners and building widely accessible and usable technology across as many platforms as possible have been keys to our competitive success as well.

Moving on to our platform expansion. Circle's platform has really evolved from being a stable coin network to being a comprehensive platform and infrastructure partner for on chain finance, spanning our 3 platform pillars. Arc and our developer infrastructure, which includes the tools, the operating systems and the onchain protocols and infrastructure to enable the Internet financial system to flourish. Our digital assets and services which includes USDC and EURC, the world's leading regulated digital dollar and digital euro, tokenized funds such as USYC and liquidity services such as Circle Mint and xReserve that ensure liquid and available stablecoins around the world.

And our apps. CPN is a rapidly growing application service from Circle for payments. And in beta now, StableFX, an application service for FX. We continue to invest in our platform and our infrastructure to expand what we can provide to companies around the world. With Arc and our developer infrastructure, we're seeing very strong progress. Our Testnet launched in Q4 with over 100 companies in banking, capital markets, digital assets, technology, commerce and payments. All leading brands actively testing, evaluating and working with us to bring this into commercial production. We've had near 100% uptime since the launch of our Testnet with an average of 0.5 second for transaction settlement finality, over 166 million total transactions and we're now averaging around 2.3 million daily transactions in our testing environment. We're on track to launch Mainnet in 2026, and we're thrilled with the progress we're making. More exciting things to come in terms of technology, partnerships and our ultimate Mainnet launch.

I also want to touch a little bit more on CCTP. Obviously, we have had very strong year-on-year growth, very strong growth in the number of transactions that are happening over this network. But I want to call your attention to the market share for CCTP. You can see here that for USDC, CCTP is nearly all of the traffic that flows from moving USDC across blockchains, but we also reached more than 50% of all bridge volume. Not just of USDC, but of all assets across chains that we track. And in fact, in January, that volume reached 62%. And CCTP is becoming a critical infrastructure for how value moves on the Internet, and we're excited with our advancements in CCTP and the advancements in our interoperability infrastructure through our acquisition of Interop Labs. Through these advancements, we're building new capabilities that are really aimed at helping asset issuers of all types, whether you're issuing tokenized stocks, tokenized funds, tokenized bank deposits and new stablecoins to be able to take advantage of this tremendous interoperability infrastructure, to enable your assets to travel on these highways that Circle has built to move value on the Internet more seamlessly. We view interoperability infrastructure as a huge opportunity for us.

And we also saw a strong growth in Circle other digital assets. In the fourth quarter, EURC reached EUR 310 million, representing 3.8x year-on-year growth and has already grown 25% since quarter end to EUR 389 million as of February 20. This reflects the growing demand for regulated euro-denominated stable coins and EURC remains the largest euro stablecoin. USYC, our tokenized Money Market Fund has also grown strongly since Q3. We acquired USYC in January of last year. We integrated it into Circle and we developed a new product and distribution strategy around it, focused on tokenized collateral on digital asset exchanges. With the relaunch of USYC, we've seen accelerating growth driven by demand for USYC as collateral on leading exchanges like finance and others. USYC assets ended the year at approximately $1.5 billion and have continued to grow to now over $1.7 billion in assets since quarter end.

In our apps pillar, Circle Payments Network continues to scale. We have 55 financial institutions enrolled, that's up from 29 in the third quarter. We have 74 financial institutions that are currently in eligibility reviews, and we continue to maintain a strong pipeline with interest from hundreds of banks, payment firms and others all around the world. We've continued to expand the markets where CPN is available with live flows now in 14 markets across the Americas, EMEA and APAC. And importantly, CPN volumes continue to ramp, with annualized volume based on a trailing 30-day period as of February 20, reaching $5.7 billion. That's growing approximately 68% from our third quarter earnings update. We are aggressively investing in product development for CPN and have a strong pipeline of upcoming country launches and anticipate adding 11 new markets in the coming months.

We also launched StableFX in production beta. This extends our application layer by combining institutional-grade FX execution with onchain atomic settlement, enabling 24/7 cattle efficient currency conversion and simplified risk management. We have stablecoin issuers for many jurisdictions participating in this, and we are excited to bring this application online alongside Arc, which will benefit the entire digital asset ecosystem and provide key infrastructure as we continue to scale CPN as well.

I want to talk specifically about AI at Circle. We are seeing an explosion of developer activity around AI and it's becoming an important driver for Circle's platform, and we believe an important and potentially significant driver for USDC adoption. We have a number of initiatives here. As many of you may have seen, when OpenClaw, the new open-source autonomous agent system came out. We quickly responded and ran an agent-only hackathon, where agents competed with each other to build innovative applications with USDC, and agents themselves voted on the winners, and we saw incredible engagement on this. We're also building systems to better support Agentic payments. In fact, we just went into Testnet release of a new capability with Circle Gateway that allows for agents to autonomously and programmatically automate cross chain USDC transactions with a transaction cost of [ $0.00001 ]. This is live on our test net, and we're thrilled with what this is going to enable in terms of genic payments and monetization models on the Internet. We believe that no other payment system in the world can do this.

We're also investing in helping developers who are building AI agents and are using AI for their own development to build faster and smarter with Circle products. We're bringing our capabilities as an infrastructure provider in skills libraries and providing servers that allow developer tools and AI agents to directly use Circle products, and we're seeing great uptake on this. Now inside Circle, AI is also becoming foundational infrastructure across all of our functions. We began our work with AI like many companies over the last 2 years, and our investments there are accelerating. We are making core AI infrastructure and automation a critical component that's embedded into all of our operations, agenetic infrastructure, specialized tooling and specific AI playbooks. We're building the governance that will allow all of our employees to self-serve, develop, deploy and use AI agents across their functions. And we're deepening AI integration across every aspect of our product development, design, engineering and deployment life cycle and seeing very strong results. Our product velocity is accelerating and I anticipate that to continue alongside the exponential improvements we're seeing from AI coding agents.

Now my own belief is that AI platforms, AI agents and blockchain-based economic operating systems will support trustworthy, automated, transparent and hyper-efficient infrastructures that are going to be the underpinnings of the future of the global economic system. And I believe that this is going to be one of the most accelerated periods of technology transformation in the history of the world, and it really is just thrilling to be here building core infrastructure that can help to underpin this new economic system. I've never been more excited about Circle's market position, platform stack and our growth opportunities.

With that, let me turn it over to Jeremy Fox-Geen, our CFO, to take you through the financial results.

Thank you, Jeremy, and good morning, everyone. I'm pleased to report we delivered strong financial results in the fourth quarter and full fiscal year, closing out an exceptional year of growth and momentum for Circle. I'll start by reviewing the quarter and then provide our forward guidance.

USDC in circulation was $75.3 billion at year-end, up 72% year-on-year and notably grew faster than the overall CFX stablecoin market. USDC held within Circle's platform infrastructure or on-platform USDC, grew 5.6x year-on-year to $12.5 billion at year-end, representing 17% of total circulation. The reserve return rate was 3.81% for the fourth quarter, down 68 basis points year-on-year, reflecting the decline in SOFR during this period. Total revenue and reserve income increased 77% year-on-year to $770 million for the quarter as growth in average USDC in circulation and other revenue was partially offset by the lower reserve return rate.

Total distribution transaction and other costs increased 52% year-on-year to $461 million. I do want to remind you that distribution costs in the fourth quarter of 2024 included the previously disclosed onetime payments of $60 million to a large distribution partner. Revenue less distribution cost margin was 40.1% in the fourth quarter with a modest quarter-on-quarter increase of 0.6 percentage points, primarily reflecting the impact from growth in other revenue. Other revenue increased to $37 million in the fourth quarter. Subscription and services revenue was $24.7 million in the fourth quarter, primarily from revenue associated with our blockchain network partnerships. Transaction revenue was $12.2 million, primarily from blockchain rewards revenue, where our revenues from running a super valid data on the Canton Network increased substantially as Canton Coin began trading during the quarter.

Total revenue and reserve income less distribution transaction and other costs grew 136% year-over-year to $309 million in the fourth quarter. Adjusted operating expenses grew 32% year-on-year to $144 million for the quarter as we continue to invest in growing our platform and distribution at this pivotal time for our industry. Adjusted operating expenses include payroll taxes, including payroll taxes related to stock-based compensation, which were $8.4 million in the fourth quarter while we had no such expense in the prior year period.

Beginning in the first quarter of 2026, we have amended the definition of adjusted operating expenses. First, to exclude stock-based compensation, payroll tax expense, we aligned with our treatment of stock-based compensation expense. And second, to exclude certain onetime legal expenses, acquisition-related costs and were relevant restructuring expenses all of which totaled $2.9 million in the fourth quarter as they reflect the same adjustments as in our adjusted EBITDA measure. Based on this amended definition, adjusted operating expenses would have been $133 million in the fourth quarter and would have grown 28% year-on-year on a comparable basis. Adjusted EBITDA grew 412% year-on-year to $167 million, reflecting the operating leverage inherent in our model. The prior year adjusted EBITDA included the onetime distribution payment that I previously mentioned. Adjusted EBITDA margin was 54% in the fourth quarter.

I want to take a moment to briefly recap our FY '25 guidance and results. First, our guidance philosophy. We are building our business for long-term success. And moreover, several of our most impactful performance drivers are visible to the market in real time. As such, we do not give detailed quarterly or full financial guidance, we guide only on certain metrics to help our investors better understand our expected performance trajectory. We will update this guidance when we expect our performance to materially deviate from guidance. USDC in circulation at year-end grew 72% year-on-year. FY '25 other revenue of $110 million exceeded our guidance of $90 million to $100 million. Fourth quarter results came in better than expected, largely driven by a $7 million benefit as Canton Coin began trading. FY '25 RLDC margin of 39.4% exceeded our guidance of approximately 38%. Fourth quarter margin came in better than expected, driven by the combination of other revenue outperformance as well as a sustained reserve margin. FY '25 adjusted operating expenses of $508 million was in line with guidance.

Let me conclude with comments on our guidance for FY 2026. We do not give guidance on USDC circulation or growth. We are at the beginning of meaningful shifts in the global markets for money, and we expect both long-term growth and quarter-on-quarter variability. As previously noted, we would anticipate USDC to grow at a 40% CAGR over a multiyear through cycle. We anticipate FY '26 of the revenue to be between $150 million and $170 million. We anticipate the FY '26 RLDC margin to be between 38% and 40%. We anticipate the FY '26 adjusted operating expenses to be between $570 million and $585 million, reflecting growing investments in building our platform capabilities and global partnerships. As noted before, beginning in the first quarter of 2026, adjusted operating expenses will exclude payroll tax expense related to stock-based compensation, which totaled $20.6 million in FY '25, as well as certain onetime legal expenses, acquisition-related costs and where relevant restructuring expenses, all of which totaled $10 million in FY '25. Our 2026 guided range reflects this definitional change as does the FY '25 comparable figure on this slide of $478 million.

Overall, we have delivered a strong close to a critical year for Circle with meaningful growth and strong profitability. We are only just beginning to attack the opportunity before us, and we remain excited about our future. I want to thank the team here at Circle for your continued hard work to thank our investors and analysts for your support and engagement. With that, operator, we can now start the Q&A portion of the call.

[Operator Instructions] Your first question comes from the line of Devin Ryan of Citizens Bank.

I want to start on kind of this agentic evolution. I think it's a compelling case. And just want to get a sense of how you think from a timing perspective this plays out? And does it start with trading liquidity and then progressing to payments and borrowing and lending or how do you see that? And then how do you make sure that USDC is in the middle of that? And can Arc perform relative to other Layer 1s technically to support this?

Thank you. It's a great question, and it's something that we are spending a lot of time on. When we designed Arc and announced and rolled out the Testnet. We talked specifically about this agentic economic activity as a fundamental design center for how we saw autonomous software autonomous agents and others conducting economic activity on the Internet. And it kind of speaks to the bigger backdrop of the early vision of the company, which is programmable money and what that allows and machine intermediated money and what that allows. And we're really seeing this convergence happen as we speak.

And so we started our journey, not just in the design of Arc, but with USDC, by making sure that we're participating in all of the key standards for agenetic payments and value movement helping contribute to what's called the x402 standard, the Agentic payment standard from Google. We're part of the AI agent consortium. So we've been engaged and involved. But something happened really a month ago, which is these -- this turning point with Claude, ClaudeCode, what's now called OpenClaw. And we really saw this kind of incredible leap in the ability for the average person, but also sophisticated developers to spin up agents to do an incredibly wide array of tests. And obviously, we're all seeing that out in the market.

And what's been interesting to see is that there's been this direct and immediate pickup where AI agents are realizing and the developers of those AI agents are realizing that agent to agent transactions need a reliable, low-cost trusted medium of exchange. And so virtually all of the AI payments infrastructure that we're seeing, the agent type activity is happening with blockchains. It's happening with USDC. So that's been very, very encouraging, and we're doubling down on that in a pretty significant way.

Now I think to other parts of your question, what's the ramp on this? I mean I think this is one of the great known unknowns or however you might want to put it, which is -- what is the -- are we having a kind of take off moment? The Collison Brothers yesterday talked about, Q1 '26 might be the takeoff moment for the singularity, we may look back at that. And I think the technology shifts that we've been experiencing are indicative of a kind of takeoff. And that leads to the uses, which is AI agents consuming work from other AI agents, the kind of collaboration amongst AI agents, AI agents distributing out work to humans, humans consuming from AI agents. All of these are happening. We've seen AI agent marketplaces launched just in the past weeks where AI agents can employ human workers to conduct tasks and be compensated in USDC, as the medium of exchange. We're seeing AI job boards where AIs can hire each other and use USDC as the way to make those payments.

So this is happening very organically. And I think from our perspective, as businesses and start-ups build products around agentic economic activity, the natural place that they're going to do that is with stablecoins and on blockchains, which leads to part of your other question, which is really around Arc. Arc is purpose built for this moment. Arc is built with a validation and consensus model that can support scale. ARC is built with an economic model where we can drive the cost of transactions in high-performance kind of channels down to [ $0.00001 ]. And in fact, we just went in Testnet last week with a feature that is designed for autonomous agents called Circle Gateway, which is a feature that would allow autonomous agents to hold a balance and spend not just on Arc, but on other networks and have a transaction cost of [ $0.00001 ] and get that value moved in less than a second to all these other apps and services that are out on these networks.

So we're building the primitives, we're building it at the operating system level, the infrastructure level, we're building the tooling. And we're really engaged in actually marketing to agents that are autonomously out there and want to build. So a lot more to come from us here, and we're really pleased. And I think we -- again, -- we talk about money velocity and how effectively networks and infrastructure like what we've built will lead to higher and higher amounts of money velocity. And my own view, which is in my opening comments as well is in a world of tens or even hundreds of billions of AI agents, the velocity of money is just going to be multiple orders of magnitude higher than it is today in the existing economic system. And so we're building a new economic infrastructure. We're building a new Internet financial system. And I think we're very optimistic that Circle can play a really key role in this convergence between AI and stablecoins and blockchains.

Yes. Jeremy. A great response, and we'll be fascinating to follow this evolution. Maybe just a faster follow-up, but on just Arc token, any update on kind of the considerations there, how that's evolving? And then any sense of timing of when you might make a decision on whether you would launch a token for Arc?

Yes. A couple of things I can say. I think we're continuing to explore the Arc token. It's, I think, a very good exploration. We're getting a very good understanding of how a token can play a key role in providing stakeholder incentives, governance, security, utility and other things on the Arc network. And so that exploration continues. We aren't communicating about any specific time line or other because we're still in that exploration. But as noted, we're making tremendous progress with Arc and we're making very strong progress towards Arc Mainnet, and we're very excited that come into play, and we expect to see some amazing companies participating in running the Arc infrastructure, deploying apps on the infrastructure and also providing foundational infrastructure to asset issuers and AI agents, a wide array of use cases on it. So we're pleased with the progress. And of course, as we have more to say about that, we'll share that publicly.

Your next question comes from the line of Joseph Vafi of Canaccord Genuity.

Great progress. Just -- maybe we'll just regulatory backdrop a little bit, Jeremy and Jeremy. GENIUS has been in place now for a couple of quarters. Just wondering what kind of tangible signs of progress you've seen directly from GENIUS? And then the follow-up would be on CLARITY, where we sit now, your views on it. Clearly, the stablecoins are kind of in the middle of the compromise and discussion there. So your comments and thoughts there.

Sure. So first on GENIUS, GENIUS has absolutely continued to be a tailwind for our business. And I think the sector as a whole. It has created this legal foundation for major institutions to come into this market. We've seen follow-on guidance from the likes of the SEC and the CFTC as they're clarifying how effectively what would be GENIUS compliant stablecoins can be used as collateral on CFTC markets, the recent SEC guidance in terms of the kind of haircut treatment on stablecoins for broker-dealers, which is a big breakthrough in terms of how stablecoins can be used in capital markets.

And I would just say, broadly, banks, payments companies, tech firms, large enterprises around the world are leaning in and wanting to weave stablecoins into the product strategies. And so it's also spilling over into international markets where international regulators are also saying, okay, well, we now need to kind of acknowledge genius compliant stable coins as the sort of good, stablecoins that could be allowed in their markets, and that's really strong from our perspective. So we think it's been very positive and will continue to be positive as it goes effective and as some of these OCC licenses start to come through as well, which will impact large issuers like Circle.

On CLARITY, I mean CLARITY is very close to the finish line right now. I know we're very close to the issues. There's a lot that's been reported. I think the most recent reporting seems accurate, which is that the crypto industry and the banking industry are working day over day, week over week at a staff level and with the White House to come up with some compromise language around the different kinds of rewards that people can get for holding stablecoins or using stablecoins and how they use them. And my sense is that everybody wants to figure this out. There's a lot in this for banks, capital markets, asset managers, the crypto industry as well. And so right now, I'm cautiously optimistic about it, but obviously, DC is DC and all the dynamics of the spring and everything else. It's not my job to handicap, there are probably analysts at some of your firms that can do that better.

But we're cautiously optimistic, and we do think that with CLARITY Act, if it does come to pass on a bipartisan basis, is another significant unlock for building in this space. And we'll certainly talk about that in the future, but we think it's a very, very significant unlock for the development of this market and the use of blockchains in a far broader range of applications as well.

Your next question comes from the line of John Todaro of Needham.

I guess just going back to Arc and then maybe CCTP in there as well. It seems like the evolution of these could long term become kind of asset agnostic or could be just a broad asset tokenization platform for issuance of equity, some of these other assets. I guess just, Jeremy, what are your thoughts on kind of that evolution in the long term, if we could just grow a little bit more into the long-term vision park?

Yes, absolutely. So the conceptual model for Arc for us is this is an economic operating system. It is a distributed economic operating system. That distributed economic operating system is going to be operated by a collection of known leading financial infrastructure companies, including Circle that will run the infrastructure to support the compute, the transactions, and the like and the data on these networks. And it's designed for prudentially sound financial activity and economic activity. We think that's necessary to build the real world economy on the Internet.

Within that, though, we want to make sure that as a safe and sound and secure foundation that it has several things that are important to financial system actors. We want to make sure that it has the single best, most capital efficient liquidity for digital dollars in the world. And so marrying what we do with USDC to what we're able to do with the technology and arc, we believe we can create the most capital efficient and fast digital dollar kind of liquidity model in the world. The second, which is related to another part of it is we really think about Arc as a liquidity and distribution hub for other asset issuers. And so we're building technology and this technology builds on the incredible distribution we've already created with CCTP. We're building technology that would allow an asset issuer, whether it's a tokenized equity, a tokenized fund, a tokenized bank deposit, other stablecoin issuers and any kind of asset that can be imagined that can be tokenized to be able to be issued on Arc and then be able to turn on liquidity and distribution on other blockchain networks.

So if I'm issuing a tokenized stock, and I want that tokenized stock to be able to run on Robinhood's L2 and on coin basis, onchain exchange and on some other tokenized environment that supports these assets. The people who are issuing assets really need to know that they can do it in a safe way, in a liquid way and have that kind of distribution and -- so we've built the highways. CCTP in January was over 60% of all traffic moving across these different networks. And with the new technologies that we're bringing into Arc around this, we believe that we can light up those highways for any asset issuer. And so again, back to the vision side, big picture, this is a general-purpose OS for economic activity on the Internet. As we come into the market in this environment where we have demands from people who want to build very, very cost-efficient, capital-efficient AI transactions, we have demand from people who want to build tokenization applications and get liquidity and distribution for those. We think Arc and our interoperability infrastructure will be very, very well suited for that environment.

That's great. That's very helpful. And then I guess just as a follow-up, going back to the Agentic AI comments, I would agree with you. Just with the ways of the crypto equities have been trading and then just the crypto token market in general, is agenetic AI and payments and all that within those ecosystems? Do you see the excitement kind of extending beyond stablecoins in Arc? Could this be a general tailwind for the sector?

I mean I think this is one of the most exciting -- obviously, I'm biased, but I think this is one of the most exciting kind of points of convergence out there. If I'm a developer building AI agents, and I want to build AI agents that can enter into contracts with other agents that can enter into contracts with humans that might have disputes that need proof of data or things that happen that need to execute those contracts and move money if I'm thinking about building an organization that is mostly consists of some humans and some AI agents, and I want to build the underlying governance mechanisms or how that's going to work, blockchain infrastructure is going to be how that happens. We need cryptographic proof. It's the only thing that will allow us to trust the activity and the data and the transactions of these agents.

And so we're seeing that in our developer activity. We're seeing that in the Arc developer engagement where start-up founders who are coming in from the AI space are realizing like this is kind of a back plane that is really, really helpful. And if you go back and think about other big platform shift, there was sort of -- sometimes there's the sort of 2 sides of the coin and you had the rise of mobile, which was obviously the surface area for creating applications and that corresponded to the rise in cloud platforms, which could actually be the back end and scale the back end for mobile. And so they work kind of hand-in-hand. And so I very much believe starting now, really starting now in 2026 that AI platforms and these blockchain operating system platforms will be kind of hand in glove for people who want to build for this new AI-driven economic system.

Congrats on a strong quarter, guys.

Your next question comes from the line of Pete Christiansen of Citi.

Impressive and rapid progress on a number of fronts here. And the competitive mode looks stronger than ever. Jeremy, I was wondering if you could provide some underlying color on CPN onboarding and flows, perhaps initial use cases and some stickiness, growth per FI partner that sort of thing? And then as a follow-up regarding the conversation on [ Jeto ] commerce, which looks incredibly compelling, how should investors think about this opportunity transforming Circle's operating/financial model?

Sure. So on CPN, as you saw from the results, we are seeing very steady and very strong growth in the kind of key things that we're focused on now, which is when we launch this last June, it was at sort of state 0 with no financial institutions or just a couple and the technology is just getting off the ground. We have been progressing through product iterations and then commercial iterations, as noted, we now have 55 financial institutions on the network. That's up sequentially considerably the number of financial institutions wanting to add to the network continues to grow and be robust.

And then the flows, which I can characterize a little bit more about. The flows have grown as well. So from a standing start to an annualized TPV of about $5.7 billion as of last Friday, up I think, 68% since the last time we talked to you guys, we're very pleased with what we're seeing there. We are -- a couple of things I'd say is there are more and more larger types of firms that are -- can support larger flows that we're very focused on coming on to the network, and that's a key goal. From a product perspective, we want to increase the velocity of everything that happens, the velocity of how these members can join and implement and operationalize for a lot of financial institutions, they've never dealt with blockchains. They've never dealt with stablecoins. And so kind of streamlining how they can do that. and then making sure that the highest demand corridors have good redundancies, have good players in those.

But what we're seeing in terms of use cases is this is very much B2B cross-border merchant settlement as major drivers. And we're seeing that in the markets that you would not be surprised to see businesses that are exporters out of Asia and importers in both other emerging markets and developed markets, we're seeing some application flows that are very clearly -- can be south to south and north to south remittance applications. So we're seeing the use cases we want to see. There's certainly a lot more to come there. And we're, again, very pleased with the success. I made the comment on the earnings call that we've got a lot of product investments here. We have ambitious goals here in terms of what this can scale to be. And ultimately, obviously, as this starts to get to more meaningful scale, we can start to monetize this, and our partners are already starting to monetize this. So that's a bit on CPN.

And then on Agentic and kind of the impact for us. We think about this in a few ways. I think one is just as a major new demand driver for the utility of our stablecoin network. So AI agents as consumers of this as essentially end customers in a sense that are driving stablecoin transaction volume, driving balances of stablecoins, driving stablecoins out into more use cases and businesses that are not crypto-native but are kind of interacting with this new agentic economy. I think it's a way for us to kind of accelerate into other types of software-based institutions that see that they need to have their products be consumable by AI agents and maybe with different pricing and economics and where, again, the standards that we're building around Agentic payments could play a role. But also this can drive fundamentally traffic on Arc and growth on Arc. And over time, as we've noted, we believe that Arc can create new kind of transaction-based revenue streams. And so the velocity of that, the scale of that is, again, early, but we think could be very significant over time.

And those are a few of the things. And I think we'll have more to say about this, obviously, as it progresses. But what we've seen literally just over the last 3 to 4 weeks has been really eye-opening, and we've been happy that we've had product and technology ready to go for -- and we have been working on some of the standards in this space now for some time and are ready to go for this kind of lift off moment that seems to be happening.

Your next question comes from the line of Dan Dolev with Mizuho.

Team Circle, Jeremy, great results here. Really nice to see that. Congrats. I wanted to ask you about the opportunity specifically in prediction markets and your partnership with Polymarket? Just in general, like why is USDC so critical to this very fast-growing segment? And what should we expect in the coming quarters and years from that very interesting partnership?

It's a great question, Dan. I mean I think when we think about the adoption of our stablecoin network and our broader infrastructure, we're always kind of asked like, well, what are the killer apps and we have lots of different killer apps that are emerging. We see cross-border payments is one of those. Obviously, historically, crypto trading, we're seeing Agentic emerging, tokenization and so on. But prediction markets is absolutely one of those. We've been very fortunate that we made a big bet in the kind of on chain ecosystem early on. And so USDC is sort of systemic and critical to a lot of onchain applications that were built over the past 3, 4, 5 years, and Polymarket is one of those.

And so with Poly market, we've been able to work closely with them to kind of advance how they use our technology to improve the experience for their customers, improve what they can offer to their users, make it a more seamless experience. But what something like USDC does and our infrastructure does for a prediction market like Polymarket is people want to be able to move quickly. The sort of essence of markets in general, but prediction markets, in particular, these are information markets and people want to be able to move quickly. And so stablecoins give end users and people who want to participate in these markets, the ability to basically provide collateral and settlement at the speed of the Internet and do that from lots of different wallets, from lots of different markets all around the world. So it opens up global access in a more seamless way and it gives a firm like Polymarket, a good infrastructure to kind of store that and surface that to users.

Now USDC is now offered as a way to fund your [ cashy ] accounts. USDC underpins coin-based prediction markets. You can use USDC to get funds on [ crack ] and Robinhood. And obviously, they're offering prediction market. So there's more to see here. And we want to work with the leading players and make sure that the best digital dollars, whether for settlement or for collateral, are used in all the places and having the world's leading player kind of adopt this and build on this with us, we think, is a very positive win. And obviously, everyone has been tracking the growth and success of Polymarket, which has been pretty astounding and obviously, still early days in these markets. very impressive.

Your next question comes from the line of Ken Worthington of JPMorgan.

USDC on Circle platform rose to 17% in 4Q. As we think about 2026 and the new initiatives you have underway, what is a reasonable range of outcomes in terms of where that mix can go for Circle and what relationships or initiatives are likely to be the biggest drivers of incremental on-platform USDC, say, over the next 12 to 24 months?

Thanks, Ken. We're very pleased with the 5x growth year-over-year in that a couple of things.

I think the first is we are continuing to build infrastructure products that are valuable for kind of holding and using USDC, and we're doing that across our wallets products. We're doing that across products like Circle Gateway. We're doing that in Circle Mint and in many places that we interface with customers, developers and people building on us. And the fundamental premise here is that more and more major institutions, whether those are financial institutions or others are going to want to build on our infrastructure. And Arc, for example, is a driver because Arc is our infrastructure, and it will be wired really well into mint and wallets and gateway and these other infrastructures. And so these can all work together to drive more applications, more money flow and more money stock to use Circle technologies and that contributes to what can be on top from USDC. And so in many respects, it's just continuing to build these institutional partnerships with this wide diversity of companies that will continue to help us grow that. I would say that's sort of the high level on that. We're not guiding, obviously, anything on that. But I think you've seen the direction of travel. We continue to focus on building great infrastructure people want to build on.

And one other note is we have received conditional approval for Circles National Trust Bank, First National Digital Currency Bank. That is obviously something that is important to USDC and USDC reserves and ultimately, how we work at the OCC under the GENIUS Act. It's also something that can strengthen the custody infrastructure that we provide to market participants. And so you can expect us to pursue that. And I think as we build that as a kind of fiduciary and security and operational apparatus that has some of the protections that come with the trust bank that we think that is additive to our on-platform capabilities as we go out into future quarters.

Yes. And I'd just add on to that, Jeremy talked about the expansion of our platform infrastructure and the products that we have that make it more attractive for all leading enterprises to build upon Circle's platform and technology. But I'd also add all of the rest of the infrastructure that we built that underpins what we do is part of that our broad-based global banking and liquidity infrastructure is unmatched in the stablecoin space. The broad network of users and developers and other enterprises building on USDC only makes it more attractive to any one additional major enterprise to choose to use USDC.

And of course, we're positioned as new core market infrastructure. We're not competing with any of the enterprises and the developers who build on our infrastructure for their customers.

Your next question comes from the line of Jeff Cantwell of Seaport Research.

I'll ask both the [indiscernible] and upfront. I was wondering, first, if you can give us the building blocks for your other revenue guidance of $150 million to $170 million for this year. What is causing the step up? You mind just breaking that out for us versus 2025. And then again on Arc, just to kind of get a little more comfortable with the strategy and the rollout as you're getting closer to the Mainnet launch. Do you mind giving us maybe at a high level what the rollout plan is post go into Mainnet? And I guess I'm just curious, do you foresee a world where elements of Arc and elements of CPN mesh together to deliver more value for clients and your customers?

Yes. Thank you. Maybe I'll take the second question and then Jeremy Fox-Geen can take the first question. So on Arc Mainnet, a few things. The first is we're making great progress. And as noted, the technology infrastructure through Testnet has been strong. The usage has been strong. The growth in transactions and activity and developer activity, we're very pleased with.

When we think about that transition from Testnet to Mainnet, there's a couple of key things that we're looking at. So one is there are technologies that we still want to make sure are available to all of the users of Arc network before we go to Mainnet, and I alluded to some exciting technologies. So these relate to things that are valuable to institutions doing tokenization and are valuable to AI agents doing activity on these networks. So we've got some technology delivery. But importantly, we've said publicly that the first phase of Arc Mainnet is going to be what's called a proof of authority validation. And that's really bringing on that first wave of strategic partners that are going to be working with us to run the Arc network infrastructure. And we want to make sure that we have world-class financial infrastructure companies who are running the infrastructure with us.

And so if you're a developer or you're an institution or you're an end user, you will understand that Arc network is run by some of the leading financial infrastructure companies of the world, which can -- which is really, really key to not just trust and reliability, but ultimately to governance and how we think about this going forward. So that's a key piece.

The second is we are working closely with the entire digital asset ecosystem across enterprise tools, custody, wallets, exchanges, everything that's out there to make sure that everyone is ready for that day 1. And so we want to give everyone time to get all of their infrastructure ready. And that includes deep integration across Circle's existing product stack, so that, for example, on day 1, when we go Mainnet, USDC liquidity, for example, is the best in the world is the most capital efficient in the world and becomes an attractive way for value flowing on the Internet to kind of come through Arc. So there's work there. There's work with mainstream companies who are in that Testnet group that we announced who are looking to commit to launch products on Arc and making sure we have the right mix of use cases across capital markets, payments, FX, agentic and the like. And so that's a key thing in getting those already.

And then to your last part of your question, Arc is going to be a key infrastructure for CPN. Arc will provide a very strong infrastructure for speed, reliability, prudential safety and soundness, efficiency. It simplifies flows because people only need to hold a stablecoin in order to use it, but it also has all the interoperability features built in. So Arc has best-in-class interoperability. And so if an endpoint on CPN needs to interact with a wallet that is on a different network, Arc actually gives those members on CPN, the ability to really easily get conversion into those other networks. And so Arc becomes a back plan for CPN and relatedly, StableFX, which is a key application that runs natively on Arc will also become the FX back plan to support Arc transactions. So a transaction between euro and a dollar or euro and a peso or dirham and a peso, you pick what it is, we're bringing other stable coins onto Arc, and we're bringing other stable coins and market makers onto StableFX, and that's going to allow us to provide real-time atomically swapped liquidity across currencies would shift speeds that conversion and settlement and settle them an assurances reduces the amount of capital people have to tie up and the like.

And so ARC, StableFX, CPN and Circle Mint kind of working together are going to support, I think, key things as we go into Arc Mainnet.

And Jeff, I'll take the second -- the first part of that question. So the other revenue, that was $36.8 million in the quarter, and that was roughly $25 million from subscription and services revenue and $12 million from transaction revenue. Within those categories, within subscription and services revenue, the largest part of the revenue we own within that is revenues from our blockchain network partnerships, which have both upfront and recurring elements. We've talked about how the upfront depending upon the number of integrations and the number of partnerships we strike can be a little bit lumpy quarter-on-quarter and how the underlying recurring are building up over time as we bring more and more of those online and we execute against that pipeline, which is strong.

Also within that our asset management fees on the USYC tokenized money market fund, which is relatively small today, but obviously have potential going forward. Within transaction revenues, there's -- as I think we said before, there's a number of different pieces in that. There's fees from value-added products like fast redemption for USDC for CCTP fast transfer. That's where you'll see fees over time from the Circle payments network. In addition, we also run validate our infrastructure, and we mentioned that in my opening remarks is that this quarter, in particular, because of the trading -- the listing of Canton Coin and the share price movement, we recognized unusually high revenue in this quarter, particularly for that.

Now we're not guiding on those building blocks. All of these monetizing products and services only started in the monetizable form in really the fourth quarter of 2024 and the first quarter of 2025 and onwards. So it's very, very early days for these products. But given that, collectively, this revenue line is only 8 year old, we're very pleased with where we ended up with $110 million for the year.

Your next question comes from the line of Ken Suchoski of Autonomous Research.

Circle has seen some nice leverage on distribution costs. I wanted to focus there. I mean the coin agreement is what it is, but wanted to get your latest thinking on what's happening outside of coin base in terms of distribution costs and how those conversations are going? Because those non coin-based distribution costs have been pretty stable like the last couple of quarters. So just any update there would be great.

Yes. I can take part of that, and if Jeremy wants to add anything, he can as well. I think we are in a really strong position because USDC has the strength of its network effects, which is that if you're building a product or service, and you want to have a compliant liquid available, interoperable digital dollar, USDC is the top choice.

And so what we see is just many, many products being built and launched that use USDC and connect to our stablecoin network and drive demand and drive liquidity and that's valuable for those products. Those products are tapping into essentially this globally available, nearly free dollar payment system. And so as that happens organically, that's kind of the organic developer-driven, institutionally-driven flywheels. That drives growth in USDC, and in those institutions, we don't need to go and do incentive deals or other things with. And so we're -- I think as we've said, we're disciplined about where we think it makes sense to have an incentive relationship where it makes sense, where we can see that the partner can actually drive growth and can drive meaningful growth. So we look at those as factors like where is the growth? Where is the meaningful growth? And I think that contributes to the kind of strength of the fundamental kind of unit economics that we've been able to maintain here. And that's sort of the big picture.

Jeremy may have other comments to add?

Yes. I'd add a couple of things to that important strategic narrative, which is -- and we've said this, I think, before on these calls, which is growth in USDC distribution partners, some of which is incentivized. Also leads to a growth in the strength of the underlying network effects around USDC, which I spoke about the elements of that earlier in this call, right? And that makes it more attractive for other market participants to independently build and use USDC and provide USDC-based products and services to their customers.

The underlying point of that, which is any distribution relationship we have also strengthens USDC that is not subject to any distribution relationship or indeed any incentive partnership. And that's a fundamental networks have network effects, strength to RLDC margin and our underlying economics.

Your next question comes from the line of James Faucette of Morgan Stanley.

I want to go back to the comments you made about the AI hackathon and the like. How do you think about the to-do-list for Circle to become integral to a lot of those evolving payment networks and that kind of thing, especially when obviously, there are other players or solutions like either Crypton more generally, just wondering kind of what the pluses and minuses are and how you establish a position in agentic world?

Sure. Thank you for the question. I think a couple of things I'd note. The first is that Circle has invested heavily over the past 4 to 5 years to make sure that our stablecoin network and essentially, the pipes that support the distribution, liquidity and settlement of USDC are available on as many blockchain network platforms as possible. We're on over 30 blockchain networks. And that's key because developers who are building applications are going to build applications where their agents might anchor on Ethereum. As you know, they might anchor on Solana. They might anchor on Arc, they might anchor on a new chain that hasn't even come out. There's exciting new blockchains that are coming out.

And I think we all believe that if you think about blockchain networks, these economic operating systems, like we're in the early innings of these scaling out and scaling out to the kind of velocity of transactions that AI is going to demand. And so one is we run across these networks today. And in fact, we've co-authored and participated in almost all of the key agentic payment standards. And the agentic payment standards like x402 and [ EURC 80004 ], it's a little jargon for those that aren't aware, but basically, these are sort of agent-related standards are almost all -- I think I saw a statistic and I may be wrong about this, but essentially 99% of Agentic payments that have been measured over this recent period have been in USDC.

So we have a first-mover advantage by being on all of these networks by being involved in the standards by being deployed in these ways. We also make sure that all of our own APIs, all of our own protocols are surfaced directly as skills libraries to the agentic coding systems. And as MCP servers so that AI developer tools can like seamlessly integrate to this. And so those are all things that we started making investments in some time ago that are paying off now as we get to this kind of lift off moment. So we feel good about those pieces. And I think now -- I think a lot of companies are really realizing like, let's say, you're a SaaS company, and you realize, well, maybe we're not going to sell end user seats, but we're going to sell access to our capabilities as an API to AI agents, a lot of companies are trying to figure out, well, how do you market to swarms of AIs running around and are there marketplaces where AI can find things they can use.

And so the sort of distribution in the AI agent world is like a new thing. And we chose, as you noted, right, right after [indiscernible] launched, we saw an opportunity to allow AI agents to compete in a hackathon amongst themselves to vote on things, and that was the first of its kind. And I think was a powerful marketing activity where that collection of AI agents are now well educated about USDC. And so there's more things like that, that you'll expect to see us do over time. And -- but at a technology level, just kind of coming back is we believe that Arc has an infrastructure, both because of the USDC centric capability, the capital efficiency, the interoperability and the kind of cost efficiency of transactions is going to be a very attractive high throughput infrastructure, and we're going to be leaning into that.

There are no further questions at this time. And with that, I will now turn the call over to John Andrews for closing comments. Please go ahead.

Yes. Great. Kelvin, thank you so much. And for those who couldn't get through on the Q&A line, we'll happily follow up with you over the course of the day. Again, we'd like to thank you for your attention and participation this morning and look forward to connecting you soon.

Thanks, everyone.

Thank you.

Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.

At Citi's 14th Annual Fintech Conference. My name is Peter Christiansen on Citi's Research Team covering a number of digital assets companies, and I am more than delighted to welcome Jeremy Allaire, CEO, Co-Founder of Circle. Jeremy, just fantastic to have you here.

I think you might be the busiest person out there. I can't -- when I think about the inbounds and the activity and client interest that we are having with the stablecoin theme, and it's just been off the charts, something I haven't seen in my career at all, and I think one of the things we would love to hear your perspective of, I mean, it's been quite a minute, right?

I think of this time last year, maybe prior to the elections, it was like you're hanging your hat on McHenry and Waters, right? And now you have an administration change. You had the GENIUS Act and the movement towards that. You had a tremendously successful IPO. You're ramping up Circle Payment Network, now the Arc blockchain, things like that and really just starting to beginning to see the evolution of this business of this theme, just the pieces just starting to come together now. From your perspective, what's the last 12 months been like? Are you getting any sleep?

I try very hard. No, I mean, I think the last year has been amazing. But I would also just put it in the context of the prior 11 years before that, which is building what we've built and building what we want to ultimately build, is a long-term endeavor, and I say this to everyone in my company, and I'd say this to anyone who's an investor in the company is, Circle is still an early-stage company that has the vast majority of the potential future growth and opportunity for an upgrade of the economic system into something that's more natively run by -- executed by software on the Internet and machines on the Internet. We're very early in that.

And for many years, actually, I was asked a question like what's it going to take for this to go mainstream, right? And when we actually put out a white paper about what would become USDC back in 2017, so about 8 years ago, and we outlined a vision for what you could build and how it could work. And actually, if you go back and read that white paper, you'll sort of see that a lot of those things are now kind of coming online.

But during those, let's just say, even just the trailing 5 years, right, the question was always like, what's it going to take for this to go mainstream?

And my answer was generally kind of three things. One was essentially, we needed the infrastructure to be ready, and we can all relate to what it was like when we had dial-up Internet versus when we had broadband Internet or what it was like to use the Internet exclusively on personal computers versus using the Internet on a touchscreen mobile device, and the sort of user experience and infrastructure shifts, they happen at the same time often.

And so I was really focused on like making sure that the infrastructure is there, and so we've seen really over the last 18 months, this kind of progression of blockchain network infrastructure to the point where you can actually do a lot of things that were held out as promises. You can transact at sub-second, sub-penny all around the world.

The other piece was, related to that was making it possible to actually create user experiences where the end user, whether it's a business that's doing kind of treasury management or investments or a user who's using this for payments or other financial activity can do that in a sort of safe, easy-to-use way, and so we've seen a lot of progress there.

But the two other, I think, really big pieces that were -- that I always would say is we need legal certainty, and without legal certainty, this can't scale. And that's why I spent 5 years working on the Stablecoin Bill and obviously eventually got that to become Federal Law this summer, and legal certainty is not something that happens all at once. Legal certainty is something that happens also over time.

And so Circle as a firm has worked on establishing regulation and policies around this form of activity. Really since I began the company 12 years ago. 12 years ago, I testified to the Senate on what I envisioned as the need for regulation in the space. But even with GENIUS Act coming online now fast forward, that's on the back of European governments having a stablecoin law, the Japanese having a stablecoin law, Hong Kong, UAE, now the U.K., Singapore, imminently in Saudi, in Brazil, in Turkey, in South Korea and so many other markets.

So all around the world, this new form of M1 electronic money, this new form of very safe digital cash money is being -- we're getting legal certainty on that, and that's really been essential. And so once you get legal certainty and you get the infrastructure and the UX good enough, the last piece is sort of what I broadly call operational readiness, which is that when you have a platform paradigm shift in technology. Enterprises, they don't move all at once, right, on-prem to cloud or from desktop and web to mobile, like it's incremental.

And one thing I would say is -- and I don't know if there are companies like this here in this conference presenting, but there's been an incredible amount of growth in the infrastructure capabilities, enterprise-grade, ready-to-operate, and so what that all translates to is now exactly as you said, on the back of the market being ready, the technology being ready, the sufficient amount of kind of existing distribution and liquidity and the legal certainty is now just like a race.

And so we're seeing an incredible amount of inbound activity as a company, not just here in the United States, but everywhere in the world, every single corner of the world, both governments and commercial entities, financial institutions are very focused on how they can start to implement this technology. So it's an exciting time, but I have a lot of people in my team who can work, while I sleep.

I'm sure. I need that, too. But no, often I talk to clients, and I'm like this is a little bit of an overnight success, years in the making. And the reason why you're in the pole position today is those years of work, building-out like those pieces and the components. And as you talked about, yes, the legality and the regulatory structure needed to come together. But quietly building these important blocks and seeing how the adoption curve is going to go right now. How are you feeling about your overall solution set today? And your ability to maintain the pole position for this -- what could be a massive shift.

Yes. So I think it's a great question. I would kind of step back and sort of say the opportunity is that the global economic system and the global financial system over the course of the coming 1 to 2 decades is going to be upgraded into software, and it will be software that natively runs on new economic operating systems. These economic operating systems are what we think of as these blockchain networks. And that is a major platform shift. It's as big as the web or mobile or cloud or AI.

It's a huge platform shift, and it represents an evolution in the way all facets of corporations and finance and commerce are going to work. So we have this very broad upgrading of the economic system through the Internet. That's a multi-decade opportunity, and I think it's an opportunity that is as large as any other major, major category of technology transformation in the Internet.

Now within that, you're going to have full stack Internet platform companies get built and full stack Internet platform companies, similar to we have full stack Internet platform companies that were built around the web and information discovery, around search, around social and communications, around retail and commerce, around device platforms or cloud platforms and commerce. You're going to have full stack Internet platform companies that get built around this upgrading to this Internet-based economic system. We want to be one of those.

And I think we have very strategically started with a very clear focus on establishing the kind of the digital money layer, this very safe digital money layer with our stablecoin network. And we're now, as you noted earlier, we're now building out more pieces of the stack that are necessary for, going from this early adopter phase into a much more mainstream scaling phase.

So today, just taking that core, our stablecoin network is the largest regulated stablecoin network in the world. In Q3, we handled almost $10 trillion of on-chain transactions. The amount of money in circulation on the network grew 108% year-over-year, and that delivered $740 million of top line revenue, which is a very strong year-over-year growth as well, and that business is a classic network-effect flywheel business, meaning we have liquidity network effects because we have liquidity through banking systems, both direct and indirect or secondary liquidity, all around the world, which is a huge part of its success. And then we have general utility network effects. That stablecoin network is available through tens of thousands of products and services.

So if you're building a product or service that wants to transact in digital dollars, you're at a competitive disadvantage if you don't support USDC. And so all of these products and services, whether they be wallets or payments apps or investment platforms, all of these support USDC, that creates more utility on the network, which then drives more developers to build more applications, more integration.

So we have this core, which is quite cash-flow generative for us and is a very strong business. And we're now with great intention, moving down the stack and moving up the stack. And when I talk about a full stack, that down the stack is, we have built and we are now in beta test, if you want to call it that, of an economic operating system from the Internet called Arc, which is a Layer-1 blockchain network. It is a general-purpose compute transaction infrastructure, purpose-built for regulated financial activity to happen on-chain. And so we went live with that beta test launch several weeks ago. We had many of the world's largest banks, many of the world's largest payments companies, many of the world's largest asset managers, asset issuers, fintechs, neobanks and virtually every major player in the digital asset ecosystem getting involved in collaborating with us as we prepare for the kind of commercial launch of that as well.

So that's a very exciting platform infrastructure, which has a lot of potential, and we also announced that we're exploring a token, a native token for that. And then we're moving up the stack and really taking the stablecoin network that we've built, which has all this availability and liquidity and building a layer, an application layer on top of that which makes it easier for financial institutions to wire stablecoins into their international money movement flows. So really building a money movement payment network. So bottom line is, I think we're trying to seize the moment. We're building up these complementary network infrastructures -- but obviously, building on the fundamental strength that we have with the core Circle Stablecoin Network as well.

Super promising there. And I think you're right. It is this full stack approach from Mint to last-mile. How do you feel about the components that you have in place today? What needs -- where there needs to be more work, you're also trying to grow a network at the same time, which is its own challenge. What are some of the kind of challenges -- maybe challenges is not the right word, but where is the work to be done right now?

Yes. I mean if you look across these three pillars of the company's strategy, within the core stablecoin network, right, we're still early in the adoption cycle there, right? The roughly $75 billion in circulation, you have a total market size of around $300 billion that's expected to grow to multiple trillions over the next 5 years, and the penetration of digital cash-type products like this in a world where physical cash and noninterest-bearing demand deposits globally is $60 trillion, there's a huge amount of growth opportunity there. So what do we need to do there?

We need to make sure that we're continuing to put in place great distribution relationships around the world to make sure that our stablecoins are widely available when people need them, where they want them, et cetera. And so that's a lot of global expansion, a lot of expansion in regions of the world where we're seeing intrinsic demand. It's ensuring that we get the best underlying liquidity available. These are again, liquidity is sort of an essential flywheel within the network effects more broadly of a money system. So continuing to focus on improving liquidity in the places that matter.

And then there's a whole build-out of regulated infrastructure. We have this footprint in a number of markets, but now all these other markets are building rule sets. We want to be there. We want to make sure that if stablecoins are going to be a legal part of the way the Brazilian financial system works, we want to be there and we want to be a partner to the Brazilian government. We want to make sure that the way that works, is going to work for our stablecoin network as well. So that's one big piece.

And then I think with Arc, that's obviously brand new. We're in beta test. And really there, it's about bringing that to commercial launch and making sure that we've got fantastic apps that are built on it. We have our own first-party app like CPN and Stable FX, which is an FX app utility, but getting many, many third-party apps, the leading third-party apps in the on-chain ecosystem. We want to see those. We want to see novel new applications built, and we want to see major institutions become partners in the operations of that infrastructure. So there's a huge amount of work to do there and get that stood up. And ultimately, the market will be able to look at that in terms of the apps and the usage and the transactions and the value that's deployed on the network. Those will become metrics as we go forward to look at that. But that's its own -- kind of has its own kind of platform network effect characteristics as well.

And then CPN, I mean, we're in the early stages where we've seen encouraging early growth in the financial institutions coming on, the number of financial institutions that want to be on, getting the product stack evolved and growing the flows. And there, we've got a long way to go to hit our ultimate ambitions, whether it's in terms of the amount of activity, the number of institutions, the number of markets and the feature set of that utility. But that's an investment and a build as well. And so across these three pillars, there are opportunities. There's a lot of growth and execution for us as well.

I just want to touch real quickly on GENIUS. Goes into effect, I think, 2027 officially. But then we also have market structure, the debate there with RFIA going on as we speak. And hopefully, that gets done hopefully early '26. Should investors think of that as a catalyst as well for the business?

Yes. So just first on GENIUS, while GENIUS is now federal law, the ultimate implementation will take multiple years. But what's happened is that effectively the market has begun to behave as if GENIUS is enforced. And so they're looking at products that are effectively GENIUS-compliant, such as Circles and they're looking to accelerate use of those, and then at the same time, what's happened is now that you have this body of law, the OCC, the Federal Reserve, the CFTC, the SEC, all of these financial regulators are effectively doing interpretive rule-making, guidance, bulletins and other things to make it, so that participants that sit underneath their realm can begin to use these now with incremental regulations.

So just yesterday, I think it was yesterday or the day before, CFTC Chair, Caroline Pham or Acting CFTC Chair, Caroline Pham rolled out their whole proposal for the acceptance of kind of covered stablecoin, A-K-A kind of GENIUS-compliant stablecoins as a form of collateral for margin and for settlement in clearinghouses and derivatives venues, and that's a huge new use case that's very powerful that we're excited about. So that's an example where GENIUS is sort of creating the basis for another regulator to kind of do more, and we're seeing similar things in other parts of the world as well.

But to CLARITY, the CLARITY Act is actually very important. We care a lot about it, and we spend a lot of time on it, which is that the ability to have a clear rule set for how digital tokens can be issued, sold, offered and utilized will open up the use of digital tokens much more broadly in the financial system, and that intrinsically tokens and smart contracts, the lifeblood of those is digital cash like [indiscernible], and so growth in these markets and growth in the products that can be sold, whether they're registered or offered and ultimately made available for use by consumers. The growth in tokenization and digital assets and market infrastructure to support that in a regulated way is very much a growth catalyst for us. And so we're quite supportive. And the good news is that the Congress is sort of designing these to work hand in glove, right? These are two kind of twin pillars of regulation.

Super exciting. Multiple tailwinds, multiple stories here to benefit from. A lot of the questions we get is obviously, thinking about the future and how this is going to work, particularly for real world? I hate to use the term, but real-world use cases and payments, cross-border, that sort of thing. So nearly instant, nearly free is a super compelling tagline for stablecoins. But I do want to delve into at least qualitatively, let's talk about some of the comparative unit economics of the so-called stablecoin sandwich. I'm not sure if you're a fan of that term at all.

I don't like that term.

No. Okay. But let's just talk about -- break up some of those components. So we know that FX conversion is a fairly efficient market today. So I guess the thinking is, at least from the outside-in, is that the motivation to move versus a traditional cross-border payment scheme to a stablecoin scheme is really comparing the loss of those -- obviating the need for intermediaries and certainly all the administration and fees that go with that versus the fiat conversion element, right? And there's got to -- I guess there's got to be a savings between those two that's going to motivate payment providers, money transfer players, the main players in this area to move more flows on to that. Is that the right way we should think about it?

Well, I mean, as you point out, right, there are a lot of different layers in the intermediation of money movement as it exists today, and there are lots of different approaches to how to compress that, simplify that, et cetera. And there's a lot of inertia around a lot of existing systems there.

I think what's interesting about stablecoins is, it's a little bit like other kind of consumer scale Internet utilities that have happened in the past that maybe started out with just like end users that just figured this out and adopted it. And then ultimately, it kind of gets hardened into an enterprise kind of model, and so take an example like WhatsApp, which is a great example where basically people around the world figured out like, "hey, I can just download this piece of software, and now I don't need to -- I'm not charge local messaging fees. And it just works everywhere in the world. I'm not tied to my carrier and my country", and it just exploded, right? And so you had this kind of moment.

Now WhatsApp itself just started out as a consumer phenomenon, but then eventually, there's WhatsApp for Business and then maybe they created product lines around it, et cetera. It's not the perfect analogy, but stablecoin adoption right now has sort of been driven in a similar way, which is that people have figured out that they can actually access stablecoins relatively cheaply. They can access them on exchanges and through various types of brokerage-type platforms with very good conversion rates, very good competitive currency conversion rates and within products that oftentimes allow them to kind of cash-out or cash-in whatever the payment instrument is, wherever they are in the world.

And then they hold them because they want to hold them because they're digital dollars and not the local currency. And so they want to actually hold a digital dollar instead of the local currency. Dollar banking isn't readily available necessarily, and then they discover that they can transact directly with counterparties, just like when you learned like I could directly communicate with someone or have a peer-to-peer voice call on the Internet and it was free, right? So people are -- basically people and businesses are figuring this out, and they're figuring out that I can do direct settlement, I can store value in dollars. I have no counterparty risk and it happens instantly. And so to those users who are the early adopters, this is just a far, far better system of money than they're accustomed to. And that has contributed to the growth in stablecoin adoption, in particular, over the past couple of years.

Now when you start getting into embedding this in bigger flows for enterprises, for SMBs and you want it to be a user experience that's abstracted away, whether it's fiat or crypto, et cetera, that's when you start to introduce questions about, well, are there -- do you still have all these other fees, right? This is sort of the kind of relative economics there, and what we've essentially seen is that stablecoin as a settlement layer has several immediate benefits. So one is, just the capital efficiency of being able to settle to a counterparty in seconds versus days in some cases, and so just purely capital efficiency. The certainty of delivery is another piece. So stablecoins effectively get you this bearer asset that is received. And so assurance of delivery is another key piece.

And by the way, I started my career Green Screens, sending Swift wires, sending faxes, call it, hey, did you get the -- like it's amazing.

Yes, totally, you get the sort of capital efficiencies and settlement assurance, et cetera.

And then on the effectively, what we're doing with CPN is we're saying, hey, let's take those capital efficiencies. Let's take that settlement assurance. Let's take that liquidity that already exists for stablecoins. And then let's wire that up to all the on and off ramps around the world so that users can effectively route money, whether they're going to continue to hold it in stablecoin or they're going to deliver it in an ultimate fiat form.

There, the FX quoting is still dependent on the same underlying FX market quoting that we have today. So there's no magic there right now. But we are creating a kind of competitive quoting marketplace basically, where if I'm sending funds to Nigeria or to India or to Hong Kong, I've got multiple competing providers around the unit economics. And ultimately, we want to see local stablecoins performing FX functions against dollar-stablecoin in on-chain markets like stable FX, which can provide payment-versus-payment, atomically swappable currency transactions that as an upgrade to the way this works. And I believe that the market pricing that you can -- and pricing discovery that you can achieve there will be effectively like interbank mid, so you can drive towards the most efficient pricing and anyone can then use that as a building block in their own financial applications. We're going to be building that into CPN just as an embedded component of cross-currency transactions in CPN as well.

So cost, speed, also the ability to observe and see how your payments are being handled are certainly comparative advantages versus traditional payments. I just don't want it to get lost at the programmability. This smart contract, so I know we have 8 minutes left here. I want to touch upon the use cases that you're seeing for smart contracts. How do you think about Circle's smart contracting capabilities there? How are you enabling usage and adoption of that? And then I definitely want to attack on AI at the end of that.

Yes, sure. So I mean, I think a big motivation in starting Circle and part of the vision of the company was that, first, we get to this sort of protocol for dollars on the Internet and we get this kind of efficiency and scale and unit economics for moving money. But that programmability was going to be the major breakthrough, like programmable money where you have smart contracts that are essentially machines running on the Internet that can intermediate all kinds of financial arrangements is a huge breakthrough.

And something like CPN is a great example. CPN is designed to be an extensible modular payment network. Like if I'm a third party and I want to build like a new invoice credit feature on the Visa network, like I can't like just like call it Visa and say, "Hey, I want to deploy that module onto your network. It's a closed system, right?

CPN is designed as an open system. So the very first third-party apps are actually launching on CPN, and in fact, one of them is a trade-receivable credit module that can scan in CPN flows, and as things come on-chain, you effectively have the ability to introduce these like plug-ins, like app modules that are available to third parties that are opt-in and electable.

So for example, we've worked on what's called a Refund Protocol, and the Refund Protocol is a Transaction Reversibility Protocol and has a Companion Protocol, which is an Insurance Protocol for third parties to underwrite the insurance of reversals. And so you have an insurance market and you have a refund protocol. This is just R&D from us. We haven't commercialized it yet.

But the point is like those become modules that anyone could connect and build on. They're just like LEGO Bricks, Money LEGO Bricks, but then they can be integrated into a broader stack, like a broader application utility like something like CPN, and just as a final note on smart contracts. What I think most people don't realize is the scale to which these autonomous software machines are already running today.

So something like Aave, which is a debt protocol that entirely exists as a collection of smart contracts on the Internet. It's deployed on multiple blockchain networks. I think it's handled -- approaching $1 trillion of borrowing and lending behavior. And this is just a software machine running in smart contracts on the public Internet that anyone can connect to. That's just extraordinary.

Or if you take something like Hyperliquid, which is all written in smart contracts, it is a software-based derivatives and futures' engine, that sort of software machine that runs on the Internet that anyone can connect to and use to both create derivative markets, but also participate in derivatives markets. It's a collection of protocols, about 11 people created them and it's producing about $1 billion a year of revenue. Pretty amazing.

And there are thousands and thousands of these smart contract protocols that exist that are performing all kinds of building block functions in finance, and we're in the super-nascent stage of this. Last piece on that is, Circle has a full stack to help people build deployment operation. Arc as a blockchain network is a full platform for easily deploying smart contract applications for financial applications. We have developer tools. We have developer tools to embed the user experience in your own products, something called Circle Wallets. We have something called Circle Smart Contracts platform, which is a way to actually, in a fairly templatized way, streamline the building and deployment of smart contracts, and we're definitely trying to assist with enterprises that are trying to build applications that can utilize this programmable money infrastructure.

All right. Extra credit. It's a big one. How does Circle envision stablecoins serving as the foundational currency of the future AI-native economy?

So we definitely see that. And I think generally, I guess my view is that if you look at the curve we're on with AI right now, and in particular, you look at the curve we're on in terms of agentic deployments and the kind of proliferation over, let's just say, over a 3-, 4-, 5-year period, I think we'll be in a world where there are many hundreds of millions of AI agents that are operating, and they're operating companies and they're operating work, they're operating work on behalf of companies and individuals. And that -- those AI compute environments are going to need to have trust machines, that can validate their -- kind of truthfulness and that can actually provide them with provable, very, very cost-efficient mechanisms of executing economic contracts and executing value exchange.

There's nothing else in the world that can do that other than blockchain networks and stablecoins. I just see nothing else that could do it today. And so my view is that over 3 to 5 years, the amount of stablecoin transactions, so we think TPVs, like we talked about in Q3, $9.6 trillion of total payment volume of USDC on-chain. My own view is that over...

In Q3?

Yes, in Q3. My own view is that over 3 to 5 years, total payment volumes will just go exponential because the velocity of money will be very, very different because AI agents will be able to conduct work with data and work with tasks and execute transactions and that stablecoin transactions, again, intermediated by specific policy controls implemented in smart contracts will be how that happens. And so I think our whole notion of TPV will look very different 5 years from now, and so I think it's purpose-built. It's significant. We are an active contributor to open protocols for AI agents to use payments and in-particular, to use stablecoins. We have a full set of tools for AI development tools to integrate to our whole stack to accelerate people building it.

Are you seeing proof-of-concept work or implementation work?

Absolutely, yes. So we have quite a few start-ups, some of which we're investors in, that are basically building these agentic commerce and agentic payment stacks, both at a developer level and an enterprise level. Anthropic themselves are collaborating in Arc and what we're doing with Arc, and so we're placing a number of bets.

And what I would say is this is still a discovery phase for everyone in this, and so we're focused primarily on the infrastructure side and on the developer experience side of this, as opposed to us building like full solutions. But I think -- we just had an AI Arc Hackathon that had tremendous hundreds of participants in it here in New York last week. And so it's definitely a place where there's a lot of activity.

Fantastic. Well, congratulate right on the zero -- unreal. Congratulations on a fantastic year and your pole position and super exciting theme. Can't wait to see what '26 brings.

Thank you, Pete.

Thank you. Absolutely.

I'd like to welcome you to Circle's Third Quarter 2025 Earnings Call. I'm joined by Jeremy Allaire, our Co-Founder, Chief Executive Officer and Chairman; and Jeremy Fox-Geen, our Chief Financial Officer. Earlier this morning, we posted our earnings press release and earnings presentation on the Circle Investor Relations website, investor.circle.com. The transcript of this call will be posted on that website once available. I do need to remind everyone that our earnings press release, presentation and this call contain statements that are forward looking.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in our SEC filings.

We will also disclose non-GAAP financial measures on this call today. definitions of those non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures can be found in the earnings press release and earnings presentation, which are posted on Circle's Investor Relations website, investor.circle.com. Non-GAAP financial measures should be considered in addition to, not as a substitute toward GAAP measures.

Now, I'd like to turn the call over to Jeremy Allaire.

Thank you, John. I'm excited to talk with all of you today about our quarterly results and general outlook. But before I do, I want to talk about our broader vision for what is taking place in this market, a vision of an internet financial system that guides what we're building towards at Circle. Our vision from the beginning has been that a new set of open Internet infrastructure and open software infrastructure would collide with the global financial system and ultimately transform it. We are moving more and more towards that world and realizing that vision. What we are seeing emerge is the opportunity to build a full stack Internet financial platform companies with several platform layers.

The first layer, blockchain networks are becoming foundational operating systems for economic activity on the Internet, what we call economic oasis for the Internet. These infrastructure layers will be part of migrating coordination, governance, value storage, financial contracts and other forms of economic intermediation into a software-powered and agentic economic system. This is an enormous platform and infrastructure opportunity that we believe is even larger than any past Internet platform technology.

On top of these economic oasis is the second platform layer of digital assets. This includes stable coins, Internet native digital assets based on protocols and applications and broader tokenization, including the tokenization of traditional assets and many other types of economic contracts. All of these digital assets will be built on the first layer of blockchain networks the economic oasis for the Internet. This digital asset layer is fundamental to how economic value will be stored, transformed, transmitted and exchanged all around the world.

On top of the blockchain and digital asset layers is the third layer, new application utilities that are built for the Internet economy. Application utilities for payments, commerce, treasury management, capital formation, lending, governance and many other applications that are fundamental to economic activity. Full stack Internet financial platforms are emerging and Circle intends to be the leader in this space.

With that backdrop, I want to discuss our latest results and our progress in expanding our platform and building towards the vision that I just described. In Q3, we saw very strong growth in our network. USDC in circulation grew 108% year-over-year to $73.7 billion. This is tremendous growth. And we're very proud that our growth also represents continued market share expansion. Moreover, the amount of on-team transactions using USDC grew 580% year-over-year to $9.6 trillion in Q3, underscoring the inherent and increasing velocity and efficiency of using USDC as a medium of exchange. This increasing velocity of money is a crucial feature of the Internet financial system. We had strong financial results in the third quarter.

We realized $740 million in total revenue and reserve income, representing 66% year-on-year growth. Our adjusted EBITDA grew 78% year-on-year to $166 million, with a 57% adjusted EBITDA margin, a 737 basis point expansion. And we've delivered continued expansion in our platform. We launched ARC into public test net in recent weeks with over 100 major participants. I'm going to talk more about that in a few minutes.

We're also sharing today that we are exploring the possibility of launching a native token on the ARC network, which we think could be an important component for driving utility, incentives, growth, and governance of the ARC network. We saw Circle payments network product expansion with multiple product releases and significant growth in transaction volumes, and we've continued to expand our stablecoin network across more chains with 5 new chain launches and 28 supported chains today, part of our deep commitment to maintaining a strongly market neutral position.

And adoption has been expanding across a range of use cases, industries and types of firms. Overall, the stablecoin market has continued to grow strongly and Circle continues to gain share. On a year-over-year basis, the stablecoin circulation grew 59% because we grew faster than the overall market, Circle's share grew to 29% in the third quarter. Based on Visa's published analysis, stablecoin transaction volumes have grown approximately 130% year-over-year with USTC share expanding to 40% in Q3. And as you can see, the dollar stablecoin space remains a market with 2 leading issuers and a number of much smaller players as we continue to sustain our strong position despite increasing competition.

At the heart of our competitive position are durable and powerful network effects that are anchored in several areas. The trust that we have been trying in our infrastructure by being regulated audited, public, transparent and compliant. The core liquidity infrastructure, our reserve infrastructure with systemically important banks and banking connectivity around the world providing at-scale minting and redemption. But also our broad distribution across blockchain networks and ecosystems, which has helped sustain the broader utility of our network. And we continue to innovate in product and technology and developer services which provides powerful infrastructure for application developers, financial infrastructure companies and others to build on.

Crucially, we have been able to maintain our competitive position by being a market-neutral infrastructure that leading companies can build on top of. Our stablecoin network growth remains strong. As already noted, on chain transaction volume grew to $9.6 trillion in the quarter, up from $5.9 trillion in Q2.

CCTP, our cross chain transfer protocol is a key infrastructure in enabling capital efficient and secure transfers of digital dollars across blockchain networks, applications and services. CCTP volume grew approximately 640% year-over-year to $31.3 billion in Q3. And in fact, over the quarter of all bridge volume of all assets from major bridge providers that we track. CCTP represented 47% of all of that traffic.

In October, it was over 50%. This is really key as we think about the expanding role that Circle can play in providing infrastructure that supports broader cross chain interoperability for digital assets. We're continuing to gain share in digital asset trading markets as well. It's a key priority for us. And you see this in our growing share of spot trading year-over-year and then the ongoing expansion of USDC within perpetual markets, in particular, on platforms such as Binance, the world's largest centralized exchange and hyper-liquid the largest decentralized exchange.

From June 30 to November 8, we've seen our tokenized money market fund, USYC more than triple in size to approximately $1 billion, making it the second largest TMMF in the world. This is an important part of our growth in tokenized collateral for digital asset markets. And use case expansion and adoption is growing. We're seeing adoption in capital markets in payments in the digital asset ecosystem with banking infrastructure providers and to provide dollar access around the world, including with leading companies such as Brex, Deutsche Borse, fire blocks, Finastra, Kraken and Itau, the largest bank in Latin America. These are all key use cases with industry-leading companies that chose to work with Circle and which will be important to the ongoing growth and adoption of our stablecoin network.

While USDC and Circle's broader stablecoin network are central to our business today. We are continuing to expand our platform across key dimensions. Coming back to this idea of building a full stack Internet platform company, Circle has been methodically building infrastructure that goes down the stack into the core network operating system layer with ARC and moving up the stack into the application utility layer with CPN. With ARC, we've just delivered a critical and significant milestone in recent weeks with the launch of the ARC public test net. When we think about this layer of infrastructure, we really look at it as an operating system layer, an economic OS for the Internet.

Over prior decades, there have been fundamental platform shifts for how software infrastructure supported growth in the utility of the Internet. The web has an OS for information and data the evolution into mobile as an organizing operating environment, cloud as an operating infrastructure and then other core utilities such as social, search and commerce, helping to organize ecosystems, platforms and activity. And now we're seeing 2 new major operating system paradigms, AI platforms and blockchain platforms.

With ARC, we've created something that is enterprise-grade and purpose built to bring stablecoin finance and real-world economic activity on chain. Our public test net launched with over 100 world-class companies spanning every major category of the financial industry, major payments firms, technology companies, fintechs and broad support across the digital asset markets industry. From Apollo to AWS, BlackRock, HSBC, MasterCard, Standard Chartered, Visa and so many other tremendous firms who are testing, evaluating and collaborating with Circle as we seek to bring ARC to commercial main net launch in 2026. We've also been activating ARC across our entire Circle product suite, making it seamless for developers and all participants in the ecosystem to take advantage of this new infrastructure from Circle as they prepare for [indiscernible].

Our vision for ARC is of a globally distributed network with infrastructure operators all around the world in every region of the world, from every economic system in the world. and we envision strong stakeholder incentives and governance to help drive the adoption and evolution of this network. Consistent with that thinking, Circle is actively exploring the introduction of a native token on the ARC network. This is an exciting development that we're actively looking at, and we'll share more as we continue our exploration. We are also seeing strong early momentum for Circle Payments Network, and we have expanded the CPN product portfolio. We launched CPN console which brings self-service operations to CPN members for onboarding integration and operating payment flows on behalf of their customers. This will streamline our ability to bring more members and more institutions onto the network.

CPN Marketplace itself has continued to expand as I'll talk about momentarily. And we launched a new capability called CPN payouts, which is purpose-built for automated stablecoin payouts on CPM. We've seen a number of financial institutions enrolled on the network grow to 29. We've also seen more and more institutions that are actively engaged in eligibility reviews to integrate to our network, including 55 financial institutions. And the overall pipeline of financial institutions seeking to join CPM has grown to 500.

Across these participants are global systemically important banks, payment service providers, cross-border firms, neobanks, digital asset firms and many others. We've continued to expand the markets where CPN is available. with live flows happening across Brazil, Canada, China, Hong Kong, India, Mexico, Nigeria and the United States and we expect upcoming launches for flows into Colombia, the European Union, the Philippines, Singapore, the UAE and the United Kingdom to name a few. We've also been seeing strong early adoption with rapid growth in CPN's monthly total payment volume from our first full month only 5 months ago to November 7, we've seen over 100x growth in trailing 30-day payment volumes. As of last Friday, annualized transaction volume based on trailing 30 days is $3.4 billion. We're excited about this expansion of Circle's platform, continuing to build out what we believe can be 1 of the most significant and broadly adopted Internet financial platforms in the world.

With that, I'm pleased to turn this over to Jeremy Fox-Geen for the financial review.

Thank you, Jeremy, and good morning, everyone. 2025 continues to be a year defined by growth and I'm pleased to report we continued this momentum in the third quarter, delivering strong financial results. I'll start by briefly recapping the fundamentals of our business and financial model. Stablecoin are a network business and successful networks are enduring and valuable. Our strategy remains to grow and deepen our network. We earn reserve income on the assets backing off stable coins, and we incentivize strategic partners to grow distribution and our network.

Over the last year, we have expanded our revenue lines and now earn other revenue from certain of our transaction flows and network infrastructure. And as an Internet platform business, we have a highly scalable model with strong inherent operating leverage.

Let me now review the quarter. USDC in circulation was $73.7 billion at quarter end, more than doubling year-on-year and growing faster than the overall market. USDC held within Circle's platform infrastructure grew nearly 14x year-on-year to $10.2 billion at quarter end, representing 14% of total circulation as increasingly, we are seeing leading institutions build upon our platform.

Reserve return rate was 4.15% for the third quarter down 96 basis points year-on-year, reflecting the decline in [indiscernible] during this period. Total revenue and reserve income increased 66% year-on-year to $740 million for the quarter as growth in USDC circulation was partly offset by that lower reserve return rate. Total distribution and transaction and other costs increased 74% year-on-year to $448 million. The increase was driven primarily by higher average USDC balances held on coin base's platform and other distribution incentives as we continue to build partnerships to drive growth and adoption.

Our LDC margin was 39.5% in the quarter, down 270 basis points year-on-year, but strengthening 133 basis points sequentially from the second quarter, reflecting the impact from growth with certain higher-margin products and partners. Other revenues, which are high margin and scalable, increased to $29 million from less than $1 million in the prior year, reflecting the new products and services launched since the second half of 2024. Subscription and services revenue was $23.6 million in the third quarter, primarily from revenue from our blockchain network partnerships.

We added 5 new chains this quarter and 12 new chains this year. Transaction revenue was $4.7 million. Total revenue and reserve income less distribution transaction and other costs grew 55% year-over-year to $292 million. Adjusted operating expenses, which excludes depreciation and amortization, digital asset gains and losses and stock-based compensation grew 35% year-over-year to $131 million for the quarter, as we continue to invest in growing our platform and distribution at this pivotal time for our industry. Notably, this measure includes payroll taxes, which since our IPO also includes payroll taxes on stock-based compensation. These new payroll taxes on stock comp were $5 million in the third quarter. Adjusting for these new payroll taxes to make for a cleaner comparison, our underlying adjusted operating expenses grew 29% year-over-year. Adjusted EBITDA grew 78% year-over-year to $166 million, reflecting the strong operating leverage inherent in our model. Adjusted EBITDA margin expanded both year-over-year and sequentially to 57%.

Let me conclude with a brief update on our outlook. We are at the beginning of meaningful shifts in the global markets for money, and we manage our business for long-term success. Moreover, several of our core performance drivers are visible to the market in real time. As such, we do not give detailed quarterly or full financial guidance. We do, however, provide full year guidance on certain metrics to help our investors better understand our expected performance. We will update this guidance when we expect our performance to materially deviate from that guidance.

Our USDC circulation outlook is long term and through cycle and remains unchanged. We are increasing other revenue full year 2025 guidance to $90 million to $100 million as a result of strong subscription and services revenue in Q3 and underlying growth dynamics in transactions revenue. We expect RLDC margin to end the year around 38% at the high end of our range, reflecting strong on-platform performance.

We are increasing our adjusted operating expenses for the year to $495 million to $510 million, reflecting growing investments in building our platform capabilities and global partnerships. This also reflects the impact from payroll taxes related to the potential future exercise of options by Circle employees. Overall, we've delivered a strong third quarter with meaningful growth and margin expansion. We're only just beginning to attack the opportunity before us and remain excited about our future. I want to thank the team here at Circle for your continued hard work and thank our investors and analysts for your support and engagement.

With that, operator, we can now start the Q&A portion of the call.

[Operator Instructions] Your first question comes from Pete Christiansen with Citi.

Really great trends here. Pretty impressive, particularly with CPM. I want to I want to double-click into some of the CPM results. How do you -- how should investors think about the pipeline developing here? You have 55 new partners in review a huge pipeline of -- how should we think about the conversion into full users? And then as a follow-up, if you can give us a sense of how Circle intends to monetize CPN whether directly or indirectly.

Yes. Thanks for the question, Pete. This is Jeremy Allair. Yes. We're very pleased with how CPN is progressing. Obviously, we announced it in the spring, we went online. We've seen really good traction A couple of things I'd say. I think the first is we've really been focused on making sure that we've got great product and operations that we are confident in that can scale membership and activations. And so we've made a lot of progress there and you're sort of seeing that in the results and some of the other data points that I shared.

For us, this isn't all about total size of the number of members on the network, although we do expect to continue to grow the total size of the members on the network. But we're focused on adding markets not just adding markets for the sake of saying, "Hey, we can flow money here and there. But adding quality participants, participants that have meaningful flows, participants that want the benefit of a multilateral framework like this, participants that have good reach into businesses, enterprises, consumer retail, et cetera.

So sort of quality, not quantity, I would say. And ultimately, we want to make sure and this is part of the -- when we talk about eligibility and the eligibility reviews, we're looking at a lot of things. We're looking at how strong is there local liquidity against kind of local banking systems and currencies and their ability to meet the SLAs of the network and things like that.

So we're underwriting for quality, operational capabilities and the like. And I think we're, again, very pleased with the progression and the progression of both the kind of monthly TPV and the annualized TPV run rate that we shared.

On monetization, just for the follow-up, I might add a couple of points. The first is to say we're focused now on growing the network. We're not focused on monetizing the network or extracting value. We want the network to grow so that it's creating value for all participants. In an increasing way, and that's how networks grow and become valuable.

Over time, there are many opportunities for very small fees which benefit these new, more efficient Internet scale architectures. You want to charge much lower fees than traditional models and build businesses at much higher scale.

I would just add very quickly, the members on their network can make money. This is -- these are flows where they have fees for their users and for the businesses that use this. And and for -- and obviously for ultimately the kind of currency flows that happen as well. And so -- this is, I think, an attractive platform that adds value to these members products, services and offerings where they can certainly generate value, and we want to scale that up.

So more to come there. I think we're excited about integrating ARC into CPN and kind of new infrastructure that can support these mainstream payment flows on the network.

Your next question comes from the line of Jeff Cantwell with Seaport Research.

1

I wanted to ask you on in October, Chris Waller from the Fed spoke at a payment to the basin conference. And he said that this is a new era for the full reserve and payments in DPI crypto world is no longer on the fringes of the financial system and the fed intends to be an active part of that revolution.

Curious what your reaction was to that -- and do you think surprise at that table as these start to likely start to look more closely, a crypto here.

Yes. Thanks for the question, Jeff. So we're 100% in alignment with Governor Waller. And today, Circles infrastructure, whether it be our stablecoin network infrastructure, USDC itself, our cross chain infrastructure are actually fundamental to this on chain and DeFi based financial system that's emerging. And in fact, we maintain a very strong leadership position in the DeFi based on chain world. And I think our competitive strength there has grown over time.

I think the bigger idea, which I think Governor Waller is getting at is that the ability to kind of take what we think of as the building blocks of the financial system and move those into code and smart contracts and tokenized assets that run on the Internet is like a wholesale architecture shift and it represents a major change in the actual underlying design of the global financial system from digital cash instruments like stablecoin money to financial contracts and financial market primitives, all expressed and code and that is at the very heart of the thesis of Circle.

We keep talking about building the Internet financial system. We believe there is a a large-scale change and there will be this large Internet financial system. We see it already sort of forming today. And Circle intends to be the leading Internet platform company for this new Internet financial system age. So I think it's very encouraging that the leaders of central banks that the leaders of global institutions are seeing this as well and are and are affecting policy, but also technology and business practices that are really aimed in this direction.

Great. Appreciate that. And then a follow-up I had for years, you had 29% market share this quarter. Last quarter, you had 28%. So you shift stepping up there. Do you just talk to you more about where the sharing as are materializing for you guys. I'm curious if we've seen any notable change in the U.S. demand for USDC in particular, post the passing of the Genus Act and whether that clarity has been helping out in any way with the share gains you're seeing here?

Sure. I'm happy to take that. So we -- as noted, we saw very strong growth in Q3. I think that growth has come from yes, the regulatory clarity, but also I think the overall just advancements in the technology and all of that combined is leading towards more market activity, more major financial institutions, payments firms, neo banks, large enterprises who are implementing stablecoin in their products and services, we mentioned a number of major firms that we saw in the quarter. And that -- so that is effectively a very strong set of tailwinds. And I think in a world where not just in the U.S. but in Europe, in Asia, in places like Hong Kong, UAE, where stablecoins are being regulated, the mainstream players who are coming in want to work with an infrastructure that has the trust, transparency, liquidity and compliance that a firm like Circle has. And so I think we've long held that kind of infrastructure approach as this becomes a mainstream phenomenon, not just because of regulation or because of the technology advantages that it would advantage Circle. And I think as you look at our share gains year-over-year and then the absolute growth in recent periods, I think it reflects that.

Your next question comes from the line of Joseph Vafi with Canaccord Genuity.

3

Congrats on the terrific progress. I was wondering if we could kind of drill down a little bit on or here, number one, Jeremy, I'm pretty excited in your exploration of a native token here. just double-click on that. What you're looking at, what would be some of the reasons you would move forward with it versus not and implications both ways? And then I have a quick follow-up.

Yes, no problem. A couple of things. I think the first, and I mentioned this briefly in my comments as well, which is our network is being designed and built in collaboration with a lot of major institutions. And you'll note, if you go and look at the actual ARC announcement, the range of financial infrastructure companies, global banks, firms in capital markets, asset issuers, asset managers but from all around the world, from Asia to the Middle East to Europe, to the United States to Latin America. And so 1 of the fundamental principles is we want a network that is distributed, that has operators from around the world from different geographies and geoeconomic systems, and we want to create ways for men in the blockchain network space.

But I think at this moment in time, when we're trying to bring together these mainstream companies and leading firms in the digital asset ecosystem as well. We really see the potential benefit of a native token for ARC that can provide utility for users of the network that can align incentives around the growth of the network, and that provides a concrete way for stakeholders to participate in governance around choices in terms of the technology and its upgrades, choices in terms of the expansion of the operators on the network as well. And so we're actively evaluating a token for ARC, and we'll share more about that as that comes together. But I think based on the our public test net launch and the engagement we're seeing from developers already.

We're really excited about this. We think it can be a critical infrastructure for circle, but also a critical infrastructure for the entire global ecosystem that are trying to build mainstream scale applications on these networks and operating systems.

That's great. Really exciting. And then just what does the intersection? I know it's early days, the intersection of CPN and ARC look like at this point or in the near future?

Yes. So a couple of things. I think the first is that we have -- with ARC now in Test Net, we are activating the ARC as an infrastructure in Testnet across all of Circle's products and services. And so during Test Net, we'll continue to make sure that everything is available. We just, I think, announced in the last day our tokenized money market fund product, USYC went live on our test net. And so we want to make sure that, that full suite is there.

And then secondly, directly to your question, we think that ARC network can be a very important infrastructure for CPN, providing a best-in-class infrastructure with low-cost with settlement finality and ultimately with great FX infrastructure as well. You'll note in the ARC test net announcement, there were a large number of non-dollar currency issuers launching on our test net, and a number of those are already up and running on the test net. And so whether these are yen or real or peso or Australian currencies, other currencies, we want to grow the number of local currencies, and that's important because if we can establish a seamless, real-time, atomically swappable currency exchange and embed that as a primitive that can be used by members on CPM. That could be a very powerful capability.

And so ARC as a platform for stable coin finance, and ARC has a sort of enterprise-grade and regulatory-ready infrastructure for FIs aligns very well with the ultimate goals for CPM. So we -- at the application -- in other words, the application layer CPN is building on our stable coin and digital asset network with USEC and EUR and USC and they're all able to build on and take advantage of our operating system with ARC.

Your next question comes from the line of Devin Ryan with Citizens.

A couple of follow-ups here. First, on the Circle payment network. Obviously, great to see the momentum in the pipeline there, pretty materially from the last update. Just want to get a sense of kind of the catalyst to convert that pipeline kind of on the time line, if you can give us anything there, what may close over the next quarter or 2 versus what is kind of more initial exploratory phase? And then anything on partnership economics?

And then as you do scale the pipeline, do you have the capacity? Or should we expect to see some of your costs come in?

I'll take the first part of that and have Jeremy Fox Ke-Geen take the second part of it. Just in terms of the catalysts, I think building these kind of member-based payment networks is obviously always a classic chicken and egg, right? You want to make sure that you've got flows on both sides and so a lot of our focus, as we have gotten this started is get those quality flows from originators in major markets to destinations around the world. And we're starting to see that. And I think that's showing up in some of the numbers that we've also shared. I think per my earlier comments, more and more firms who are involved in money movement, who are involved in cross-border money movement, whether they be banks or cross-border payments firms or even large enterprises that just deal with the complexity of of how they collect and remit and move money for whether it's a creator or a supplier.

All of those want to take advantage of the speed and capital efficiency and cost efficiency of stablecoin infrastructure. And so that's where we're seeing the catalyst. We're seeing the catalyst from established firms that are seeing that if they can internalize how they move money, it actually frees up capital, reduces the amount of collateral that they have to have. It creates more capital efficiency, and it can deliver a faster, better product user experience as well. So those are the kind of business motivators that people have and I think, obviously, for us, we're very focused on making sure that we've got high-quality participants across the network so that by kind to met cash law, every new node in the network exponentially increases the value of the network.

We want these FIs who are becoming members to immediately feel the benefits and the uplift that they get bidirectionally as well in using this network. So those are catalysts from what are the business drivers for people who are coming on -- and the things -- the kinds of things that we're focused on as we evaluate onboarding new members. In terms of the kind of outlook for growth on that and/or partnership models and investments, I'll turn it over to Jeremy Fox-Geen.

Thanks, first, just addressing the first piece of your question, Obviously, as the network grows and accelerates its growth so to and the cost inherent for example, in onboarding those FIs through the risk and compliance reviews and ongoing monitoring and things like that. So Yes, there will be more costs associated with that. It's kind of within our overall cost envelope. And as a technology company, obviously, we're building this in a very scalable infrastructure-driven way with sort of AI technologies built in wherever possible to ensure that as we scale and grow, we're not doing so by adding people, we're doing so in a very cost-effective, cost-efficient manner, which is very congruent to our sort of overall strong operating leverage inherent in every part of our model.

Excellent. And then as a follow-up, obviously, as you're having more conversations with potential partners and customers and those are scaling pretty materially here -- are you learning anything about kind of on the demand side, anything that could influence kind of the product road map from here? And then kind of tied to that, there's been a lot of M&A headlines in the space right now.

So just if you can touch on kind of M&A conversations or interest at the moment or even kind of what to do. Yes, sure. So I would say a couple of kind of things thematically. I think a critical need that firms that are looking to build on stable coin payments. They're looking for strong direct liquidity between the stablecoin and the stablecoin network and local markets. And so that's been a key focus for us basically ensuring that our liquidity network is as strong as possible. We meant and redeem at scale through major financial market centers around the world. We're increasing the number of significant banks that are kind of plugged into our infrastructure in these major markets? And sort of if you think about that, that sort of like the width and the efficiency of the pipes, how efficient and cost efficient is it to be able to move capital through those pipes. And so that's been a big differentiator for us. And I think we're now able to build on top of that these other abstractions, whether they be FX abstractions, settlement credit abstractions, the CPN orchestration coordination capabilities and then obviously, for many of the firms who are -- this is new to them, this is -- there's the digital asset native ecosystem who are leaning in. And then there's all these firms that are new to this -- this is really where technologies like ARC come in and a big motivator for us with ARC is we've looked for years at what does it take for a traditional FI or traditional enterprise to build an application, deploy it to use these networks and to do that in a simple, safe and well assured process as possible.

So with ARC, for example, deterministic settlement finality in subsecond transaction costs of around $0.01. The fees paid on the network are actually in USDC and other stable coins over time and confidentiality features. These are critical features that people need to make this work for them. And this is really the classic evolution from an earlier adopter set of technology infrastructure, an early adopter mentality, which has largely been focused on speculating and a mainstream scaling phase where the infrastructure needs to map to the mainstream needs. And I think those are the things that we're doing up and down the entire product stack, not just in CPN, but the entire product stack that we're building for all of these mainstream institutions around the world who are looking to build on this infrastructure.

And then just taking the M&A part of your question, when we've talked about M&A and our internal M&A strategy, right, we see M&A as -- and its use as accelerative to our core offerings. So we have offerings in the blockchain space in the digital asset space. And then in the application space on top of all of those with the Circle payments network, we've done 3 deals closed 3 deals so far this year, and we would expect to continue to do M&A to accelerate within each of those within each of those spaces. We do not anticipate using M&A to diversify for diversification sake.

One last comment there is we've been building infrastructure in this whole space for a very long time. And so -- and there are other firms who want to be in the space but need to catch up. And so naturally, you're sort of seeing people who are trying to find teams and technology and other things out there we've built everything that we do historically, more or less organically.

As Jeremy noted, we've acquired IP and teams and others, and we'll continue to look at opportunities as noted. But -- we feel very good about our kind of innovation curve itself and our direct IP generation. We actually recently noted that we had 25 patents generated from the novel engineering and research and development of Circle.

Your next question comes from the line of John Todaro with Needham.

Congrats on the results here. I guess I have 1 and a follow-up. First, on the on-platform performance, I think we've been continuously pretty pleasantly surprised with the USDC on Circle platform here up to $10.2 billion. Just trying to frame this up. I would think most of this is for payments, cross-border money movement versus kind of crypto native. Any kind of maybe percentages or just framing that up and give us a little bit more color? Is that the right way to think about it that, that moves more towards some of the payment verticals versus some of the crypto-native [indiscernible] then I have a follow-up on ARC.

Sure. So John, we don't break out the on-platform by, say, use case directly. But what I can say is for Circle, what we've been focused on is building partnerships with firms that want to build on top of our technology stack ideally end-to-end on our technology stack, taking advantage of our wallets, our circle Mint, our core liquidity and increasingly these other developer services and infrastructure like CPN. So we've very much focused on firms that want to build on our infrastructure. And we focus on building partnerships with firms that are going to be growth oriented, meaning we want to have -- we want to do deals with and build strong economic relationships with firms who have a credible path to driving growth. And so those have been the focuses. And I think when we look at the partnerships that have helped us grow on platform, they all fit that criteria.

Overall. And I think in some cases, just to give you a little bit more color, in some cases, these are partnerships with firms that have tens or hundreds of millions of users and those users are oftentimes in what I'll kind of call like financial super apps, where they offer wallets, they offer payments, they offer trading, investing and other things. And so we don't see through into the -- all of the behavior of their users and how much of it is for peer-to-peer transfers versus investments and other things as well.

So -- but the nature of this is we're really going after partnerships with platforms that have good distribution and are growth oriented in what they can do with us.

That's very helpful. And then my follow-up on ARC. As you mentioned, the fees are paid in USDC and other stablecoins and then also just those transaction fees are so de minimis. And I can't imagine a token would be would be for gas fees or anything of that like you kind of framed it up as maybe like a governance token. Is that the right way to think about it? And I know it's early, but just maybe some more of the potential like economic accrual or utility outside of -- yes, I guess just what would the other potential utility be if it's not for the gas side?

Yes. So a couple of things. I think as I said earlier, we're looking broadly at utility economic incentives stakeholder participation and governance across the full ecosystem that will engage with ARC. And we are exploring a token for ARC network that aligns with trying to accomplish all those things. But there's not a lot more I can say right now. Certainly, as we continue this exploration we'll be able to share considerably more assuming that continues to go well.

Your next question comes from the line of Ken Sekowski with Autonomous Research.

I wanted to ask about the other revenue. I think subscription revenue stepped up nicely quarter-over-quarter. So how much of that is driven by adding the 5 new chains that you talked about versus some of the other recurring revenue sources and then maybe on the transaction revenue within other revenue, I think that ticked down slightly quarter-over-quarter despite showing really strong growth across the various metrics. So maybe a little more detail on why the decline quarter-over-quarter?

Thank you for the question. There's a lot that goes on in this. So let me try and unpick some of the pieces. Yes, the sort of, as you said, strong growth in subscription and services revenue, primarily that is revenues from our blockchain network partnerships. As I think we said before, that revenue stream has 2 components that are upfront revenues from the various integrations that we do. And then there are ongoing revenues for maintaining those. Now the pace and progress of the upfront and depend upon a whole number of different factors. And so we've historically and we'll do so, again, describe that business as lumpy. And so we had a very strong quarter, and we had a long pipeline of fees, and we've been working very, very hard to execute to execute upon those. And so the upfront fees is the largest part of that bucket, but we're seeing strong growth in the underlying recurring revenues within subscription services, which we're very happy about.

You note the decline in transaction revenues rightly from $5.8 million last quarter to $4.7 million this quarter, -- and then you comment on the underlying growth of so many other things. There's a wide variety of elements within transaction revenues. And yes, we are seeing strong underlying growth in many of them the decline quarter-on-quarter is best thought of as a spike in the prior quarter, a spike in redemption revenues associated with our USYC tokenized money market fund product after we have made that acquisition, we repositioned that product to be used as collateral within the digital asset markets. And through that repositioning, we saw a very large amount of redemptions, leading to a spike in redemption fees in the second quarter masks the underlying growth trends in the other products and services within that. Notably, USYC itself has returned to growth it has grown at 200% from the end of last quarter today and now stands as the second largest tokenized money fund product in the world.

Great. That's helpful, Jeremy. And then for my follow-up, I wanted to ask about the implied 4Q guide just because we're getting a few questions on it for RLDC, I think there's some assumptions we have to make there. But I think to reach the full year guide that implies quite a bit of sequential step down in margins -- maybe you could talk about what's driving the step down. We would have thought that the performance on Circle on platform, USDC and then some of the other revenue at a high margin that RLDC margins would actually improve over time, but maybe there's some dynamics in the market related to rewards and distribution costs. So any thoughts there? Any help there would be very helpful.

Thank you. And that's a great question. And again, I'm going to say there's a lot of different pieces moving around in the underlying there, which could can make it quite difficult to on Teck. We're very pleased to have seen strong sequential RLDC revenues against a backdrop over the last few years is that declining.

We've long said that networks have network effects, and we see this both in sort of growth of off-platform, USDC and in certain of our economic agreements. There can be some lumpiness within those which kind of gets to the point on the guidance. On our philosophy to guidance overall, we've consistently said that we want to be as clear and transparent with you as we have line of sight into -- so we take a sort of modestly conservative posture. We don't bake in everything we hope is going to happen or everything we're working on, and we're working on an awful lot of things we bake into sort of our line of sight on what we feel confident that is going to be delivered, and we would always look to meet our outperformance.

Your next question comes from the line of Dan Dolev with Mizuho.

So yes, overall, really strong 3Q, kind of touching on that question from before. I mean, if the book case is the TAM is growing and that could have set rate declines, you do seem to -- I mean you were talking about guiding down Q4 other income and expenses are rising I don't think we've heard like a really good explanation. But maybe my bigger question is what would be the pushback to the skeptics in the industry who are saying, look, this is somewhat of a commoditized thing. I think even the networks are saying there's going to be a lot of stable coins, like what would make USDC win in this market long term.

So maybe like a shorter-term question on this Q4 guide and then longer-term, more conceptual question would be great.

Dan, this is Jeremy. Thanks for the question. I'll actually take the second part first. I think there's a fundamental misunderstanding in the market. And I think that there is a sort of -- there's a view that, hey, anyone can kind of pop out a stable coin, and therefore, if it's a big company that pops out a stable coin, that it's automatically going to be successful. We've actually seen the opposite historically. We've seen consortiums of major companies launch stablecoin products that effectively had 0 circulation. We've seen very large players with huge numbers of users, push, push, push on this to get very, very little traction. And I think the misunderstanding is that stablecoin networks are like other Internet platform utilities, meaning they have network effects, and those network effects come from the number of products and services and integrations to the network. And so if I'm building a product and I want to support stablecoin settlements and stablecoin payments, you're at a disadvantage if you don't support USDC because it has so much interoperability around the world. And we see that all the time.

We see major B2B firms adding USDC as the payment option without a deal with Circle, without any relationship with Circle, they're doing it because it's got the most reach and interoperability. So there's sort of the network utility -- that also ties to what I would describe as developer flywheels, which is developers want to build and integrate to things that are going to help them themselves provide utility directly to their users. And so the reach of the network and the utility of the network compound each other. And then the other piece, which is I think also not as well understood is that these digital currencies live and breathe by the liquidity that exists around them. And so we have focused years on building the best, most widely integrated liquidity network for USDC, primary liquidity in major banking systems around the world, as well as secondary market liquidity so that it exists on brokerages, exchanges, payment apps, wallets, through banks and others around the world. that primary and secondary liquidity is also something with network effects. If you want to do something and know that your counterparty is going to be able to be liquid in it and utilize it, that liquidity is really key.

So those are big -- those are very big, I think, a very powerful network effects. And I think the last piece of this is that there are also important kind of regulatory and infrastructure moats that exist, which is that -- it's a huge undertaking to ensure that you are well integrated and supervised by central banking regimes around the world. And that's something that we've done the hard work on with over 55 licenses activated in more markets, bringing more markets online. And so the infrastructure from that, the risk infrastructure from that and then all these other network effects are really important. And I think it explains the fact that we have continued to grow at the pace we have that the amount of growth we've seen in the on chain markets, in total transaction volumes and what Visa characterizes as "real payment volumes, we've grown, and we've grown our share and despite there being more and more players. And so I think as we look out over the next 1, 2, 3, 4 quarters, you're going to see a lot of noise from a lot of people who think Oh, I need to do a stablecoin. And I think you're going to be able to measure those every single day. And I would encourage people to measure the actual trading liquidity that exists in these other tokens, the actual number of wallets that hold these other tokens and the distribution that's there. And I think we're going to continue to see what we've seen.

This is a winner-take-most market structure. It's not a winner take all market structure would say we undertake most market structure. And I think the investments that you're seeing, and I'm kind of bleeding into maybe JF other part of your question, Dan, we are leaning into this. We're seeing growth in critical to winning the Internet platform game in this space. And we're seeing a lot of commercial tailwinds all around the world in every region commercial tailwinds because of the technology progress and regulatory clarity. And we want to make sure that we are stepping into that opportunity. So that we can continue to be an outsized winner in this kind of upgrade of the financial system to the Internet. Yes, -- you hit on all the major points and then just 1 small follow-up on the piece about guidance. We are at the beginning of what can that's really only be described as a mega trend, right? The growth and the building of the Internet system, bringing Internet capabilities and architectures into the world of money. And as you noted, an rent, the addressable markets here are huge. We don't give full year or quarterly financial guidance other than other than on a few key metrics for that reason.

Whenever you see an exponential growth curve and you zoom into the detail, particularly at the early end of that curve, you see a lot of fluctuations in variations. And we think that those shorter-term fluctuations are best described as missing the forest for the trees, if 1 was to overly focus on them.

Your next question comes from Andrew Jeffery William Blair.

This is Adi Chari on for Andrew. Building out some prior questions, it sounds like maybe you're somewhat agnostic to a specific base case around the SEC and focus more on distribution. But if you have to pick, I guess, what's the most imminent use case beyond crypto training? In your view, and what's sort of the near-term visibility you have around the SEC for non-crypto activity taking off?

Absolutely. Great question. So we are definitely not agnostic to the use cases USDC, However, what we do often say is stable point money is increasingly a general purpose, general architecture form of money that is being used across a very wide range of use cases, everything from small agent to agent payments to large capital markets transactions between major electronic markets firms to everything in between. We're -- obviously, we're seeing major consumer retail acceptance platforms like Stripe and Shopify, making an out-of-the-box feature for payment acceptance. But very specifically, to get to the heart of your question, Andrew, I think we are seeing growth in cross-border and international payments with stablecoins, that has been a driver for quite some time, and it continues to drive growth that led to us building out an entire new pillar of our business with CPN, where we're seeing mainstream flows, wanting to use this as a superior money movement system. And so that is very much a driver of activity and growth and partnerships when -- we're seeing large enterprises who are looking at internal treasury management and how they can move money across geographies and deal with collections and disbursements across global markets as a growth driver. And then we've talked in the past as well about sort of digital dollar as a store value, so we continue to see demands for both firm and households who want to hold USDC and I think that if you look back at the Genius Act and really one of the goals that Secretary Bessant and other kind of, I think, promoters of that breakthrough in Federal Law really is how do we kind of continue to export the dollar in these powerful ways. So we're certainly seeing those. And then I think we're also starting to see, and this is, I think, something to kind of watch this space closely is traditional financial markets embracing stablecoins.

So traditional financial markets like clearing houses, derivatives exchanges that want to be able to use stable coins as collateral for relative margin and for settlement as an improvement over the way that works versus the traditional banking system. So we're seeing that. We're seeing big pushes around that. We're seeing regulatory pushes around that. And you've seen us announce partnerships with the likes of Intercontinental Exchange, Deutsche Sports Group and others and that's something that we are pressing on. And related to that is essentially the number of traditional financial institutions that are launching smart contracts and digital tokens, i.e., tokenized forms of investment products that already exist.

And virtually, every one of those products use primary cash leg and settlement leg. And so you have firms like a 0 hash who works with works with us quite a bit. And they face off against a lot of these tokenized issuers, for example, and driving the use of USDC there. So it is diverse, but we are not agnostic. We are leaning into the places where we're seeing both the most immediate product market fit and traction. And then also the -- where we're seeing pull from the market to -- where parts of the market are really wanting to implement this infrastructure.

And I cannot underscore how significant the Genius Act has been in terms of unlocking major institutions willingness to start embracing and using this technology. And there's a knock-on effect with regulators around the world who are also looking to conform and ensure that we regulated issue products like USDC can work in their local markets as well, which is driving institutional access and demand in those global geographies fees also.

Your next question comes from the line of James Yaro with Goldman Sachs.

I just wanted to follow up on the prior question. I'd love to just get a sense perhaps quantitatively if there's any ability to contextualize how much USDC is being used in those use cases outside of crypto trading, DeFI and developing market access to dollars, specifically the 2 use cases, which you just talked about are payments and capital markets.

So are we seeing is there any ability to sort of size how much is being used there and perhaps you can compare it versus the IPO? Or is this all on the comp?

So there is certainly growth happening in these cross-border use cases. And in fact, I think there's there's some good third-party reporting on this. There's a third-party analyst firm Artemis which has recently published, I think, some of the best data on growth in business-to-business payments, international business-to-business payments and the growth through these periods, I think I don't know what the ending period -- the ending period is pretty recent is very strong. I think it's reflective of what we're seeing in the partnerships that we're forming in the cross-border related payment space.

We don't break out across our entire -- the entirety of our transactions that, although almost by definition, CPN flows are that because of the construct of the product. But the uses of USDC in international settlements go well beyond what is happening just inside of CPN. So we don't break it out, but there are, I think, very good third parties who are looking across the entire ecosystem, not just Circle to size that growth and activation.

Okay. I'd just like to touch on the potential that stablecoins could become interest-bearing in Congress market structure, Bill. How should we think about the impacts on your business if interest were permitted?

So I think the key issue here is specifically not that stablecoins would become interest-bearing. I don't think there's anyone who's looking at revising the Genius Act and the prohibition on stablecoin issuers being able to pay interest, I think what's that -- what's in discussion, I should say, in the market structure legislation, is whether or not distributors of stable coins, exchanges, brokerages, other wallet products have the ability to use rewards as an incentive for people to use stablecoin on their platforms. And that is permitted under the Genius Act, and I think there's a a real push from other parts of the industry, not the digital asset side of the industry to amend not the Genius Act, but to provide provisions in the market structure bill, which would allow these stablecoin distributors continue this practice of offering rewards. I think -- we think that the language in the Genius Act is very good.

We think it creates a balanced approach here, and it keeps -- importantly, it keeps stablecoins considered as cash and cash equivalent instruments, which is vital from a financial markets perspective, from frudential supervisory perspective as well. But I think we also believe that there should be business model innovation in these kind of distribution platforms for how they engage with their customers. And so I think we're also supportive of of the industry's view on that as well.

Your next question comes from the line of Ken Worthington with JPMorgan.

So you've announced a series of arrangements with high-profile financial institutions to utilize USDC and I guess the fact that they're choosing USDC shows the power of your brand. What are you seeing in terms of the economics that they're asking of you? Are these new partners sort of getting full fare -- or are you seeing the power of the network, allowing you to negotiate better economics for you in these arrangements than maybe what you had seen in the earlier arrangements.

Yes. It's a very good question, and it relates to something I shared earlier, which is that we have a very powerful global utility that, in some ways, people can't afford not to support and integrate with. If you're building a product that wants to be interoperable in this world, you need to support USDC -- and if you need -- if you want a product that can easily move value in and out, the liquidity of USDC is essential. So we do have, I think, as noted, very strong network effects. And when we think about partnerships, -- as I said earlier, we're very focused on -- we will invest in, so to speak, growth incentives with partners who can grow distribution.

That's where we're focused. And so the fact that someone adds USDC support to their own product or service is not sufficient to get any economics. We need to see a real path a win-win path where partners are going to lean in, they're going to prefer our platform and network. They're going to advance it. They're going to market it. They're going to drive measurable growth -- and only when we see that, are we going to really step in and try and get economic incentives in place. And that's important. We want this to be win-win partnerships that drive value and growth for both of us. And we know today that our network and capabilities is essential for most products that are out there. And -- but at the same time, yes, we are trying to construct win-win partnerships with firms. But a very large number of the major brands that you see supporting USDC, there's not a direct economic incentive at all.

These are just people who are choosing us because we are the most trusted, transparent, compliant, liquid, globally available in the world.

Ladies and gentlemen, that does conclude our question-and-answer session. I will now turn the conference back over to John Andrews for closing comments.

Great. Thank you, everyone, for taking the time to listen to us this morning. Obviously, the IR team here at Circle is standing by to engage with you in any follow-ups, and we wish you all a good day.

This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Circle Internet Group Q2 2025 Earnings Call. [Operator Instructions]

I would now like to turn the call over to John Andrews, Vice President of Capital Markets and Investor Relations. John, please go ahead.

Good morning, and welcome. This is John Andrews, VP of Capital Markets and Investor Relations at Circle, and I'd like to welcome you to our second quarter 2025 earnings conference call.

We are excited for all of you who have joined us this morning as we take another key step on our journey as a public company with our first earnings call.

I'm joined by Jeremy Allaire, our Co-Founder, Chief Executive Officer and Chairman; and Jeremy Fox-Geen, our Chief Financial Officer.

Earlier this morning, we posted our earnings press release and earnings presentation on the Circle Investor Relations website, investor.circle.com. A transcript of this call will be posted on that website once available.

I do need to remind everyone that our earnings release, presentation and this call contain statements that are forward-looking. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events.

The events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in that forward-looking statement. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in our SEC filings.

We will also disclose non-GAAP financial measures in the call today. Definitions of those non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures can be found in the earnings release and earnings presentation that are available on our Investor Relations website at investor.circle.com.

Non-GAAP financial measures should be considered in addition to, but not as a substitute for GAAP measures.

With that out of the way, it's with pleasure, let me turn it over to Jeremy Allaire.

Thank you, John. I'm pleased to be here this morning. It's been an honor to bring Circle public and host our first earnings call. We are thrilled to work with so many world-class people, partners and investors. We started this company 12 years ago with an ambitious mission to build a new Internet financial system with blockchains and digital currency that could increase global economic prosperity through the frictionless exchange of value.

We and the entire market are in the early stages of that vision, literally graduating from the early adopter phase of blockchain technology and digital currency into the mainstream adoption phase that is accelerating.

I want to start with some key highlights from 2025. USDC, the core of our stablecoin network, has grown to $61.3 billion at June 30 and growth has accelerated into Q3 to $65.2 billion in circulation as of August 10, representing approximately 90% year-over-year growth and 49% growth year-to-date making USDC the fastest-growing major stable coin over the past year. In Q2, USDC onchain transaction volume grew 5.4x year-over-year to nearly $6 trillion.

Our transaction volumes have also accelerated into Q3 with $2.4 trillion in transactions in July alone. We have been rapidly expanding Circle's platform and network with major new products, including Circle Payments Network, which we believe will become a breakthrough in global money movement by building an onchain native payments network that will move money faster and more efficiently and opens up new utility through programmable payments; Circle Gateway, which enables seamless cross-chain USDC experiences; 8 new blockchain partners; and Arc, our new Layer 1 blockchain network, which we are announcing today. More on that later.

Post-IPO and GENIUS Act, we are experiencing rapid expansion in commercial opportunities with major mainstream companies across every sector of finance and technology, including companies from all around the world.

And from a corporate mission perspective, we joined Pledge 1%, a global movement for corporate impact. To honor this commitment prior to the IPO, we reserved 2.7 million shares of our Class A common stock for future donations to our Circle Foundation.

As we look at the overall stable coin market, we believe that the total addressable market for stablecoins and our products is massive with dollar stablecoins only representing a mere 1% on of the U.S. M2 money supply, but with continued rapid growth in stablecoin supply.

Today, Circle operates the largest regulated stablecoin network in the world. We talk about this a lot. Stablecoins are network businesses and have meaningful network effects. Growth of our stablecoin network is driven by our platform, our blockchain protocols and the developers building applications and services on our network. That expands the circle onchain ecosystem and is the classic flywheel that has driven the growth of our stablecoin network since its launch in 2018.

Like other Internet platforms and network businesses, stablecoins are a "winner take most market" as liquidity and utility complement each other and drive growth. There have been many regulated and unregulated dollar stablecoins and many more to come, but the strength and resiliency of Circle's network effects positions us well to compete and grow.

Turning to the regulatory environment. Circle's market and competitive strength is further cemented with the signing of the GENIUS Act, creating powerful tailwinds for Circle. We believe this law will accelerate stablecoin adoption by major financial institutions, mainstream enterprises, technology companies and ultimately drive much broader use of stablecoins across retail and wholesale payments as well as broader usage in TradFi capital markets. This is likely the catalytic moment for the mainstream scaling of stablecoins, and we are already seeing this in our business momentum.

Turning to our products and platform. We are continuing to make progress with our core digital asset products, USDC, EURC and USYC. With USDC, we expanded our distribution on to 8 new blockchain networks in 2025 and significantly expanded CCTP version 2 availability, both of which continue to cement USDC as the most liquid and available onchain dollar stablecoin.

We also now offer a yield token, USYC, that can be used in both digital assets and traditional capital markets as collateral with 24/7/365 liquidity between USYC and USDC.

We're now executing that strategy, driven by our expanded partnership with Binance, who will now make USYC available as collateral, unlocking a very powerful use of USYC on the largest exchange in the world. And we're already seeing accelerating adoption there.

We've continued to expand our core banking and liquidity capabilities, including with multiple G-SIBs, strengthening our unrivaled industry position.

During Q2, we undertook the launch of one of the most ambitious new product investments, Circle Payments Network, our initiative to transform international money movement, which today already has active payment corridors in Hong Kong, Brazil, Nigeria and Mexico. We have rapidly grown our pipeline of financial institutions interested in launching on CPN to over 100 firms.

We have an ambitious road map and we'll continue to expand CPN's features and use cases. from international money movement to other types of payments such as consumer and B2B payments and still further into global capital markets and corporate treasury services. We're incredibly excited to see this level of interest so soon after CPN's launch.

In July, we introduced Circle Gateway, which abstracts away the complexity of holding USDC on different blockchains and in different wallets, streamlining usability and speeding transactions that use USDC. This is a key building block in bringing USDC into more mainstream financial and payment applications and creates new monetization opportunities for Circle.

Now I'd like to turn to a very special and major new platform initiative that we are announcing today, Arc. Arc is a new blockchain network from Circle that we will launch in the second half of the year. We are at the fulcrum of a massive mainstream embrace of stablecoins in the financial system, and firms are racing to build on this infrastructure.

But until now, the blockchain infrastructure needed to meet the most intense demands of major financial firms and enterprises has simply not existed. We are delivering that infrastructure with Arc. Arc is a new Layer 1 blockchain that is compatible with Ethereum infrastructure that operates as a stand-alone network.

Some key facts about Arc. We wanted to create a way for institutions to pay fees on blockchains in a fast, predictable manner that will be simple from an accounting perspective and could deliver very low cost and stable fees. So with Arc, we are using USDC itself as the native gas fee currency. This removes the complexity of paying transaction fees in a native token.

Arc offers enterprise-grade performance and real settlement finality. Financial institutions and regulators expect deterministic finality, which Arc will achieve with Circle-vetted professional validators and its novel consensus mechanism.

Arc will also offer configurable privacy controls with opt-in confidential transfer features, which is essential for real-world business and financial applications and also supports regulatory compliance.

And finally, Arc will be integrated across Circle's entire product portfolio and will also provide best-in-class 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, including a brief paper and platform details on circle.com and the Arc website.

Now let's turn to growth and adoption. Just in the past few months, we've seen incredible engagement and interest in working with Circle from major firms in every sector of the financial system as well as Internet and technology companies, and this is consistent and accelerating all around the world.

I'd like to highlight a few examples from our recent periods. In digital assets, we've launched and expanded key partnerships with Binance and OKX, 2 of the largest exchanges in the world. With Binance, we've significantly expanded our partnership to include broader use of Circle technology.

We're also continuing to see strong traction and partnerships in DeFi, including our planned launch of USDC on Hyperliquid, one of the fastest-growing onchain exchanges and ecosystems.

Major cross-border payment firms like Remitly, MoneyGram and ZEPZ are integrating USDC into their payment networks. And Stripe made USDC central to its new global stablecoin financial accounts for businesses. Visa, Mastercard and others have publicly announced new products and plans that would expand availability and usage of USDC on their networks.

I'm particularly excited that banking and payments infrastructure providers like Matera, Fiserv, FIS and Corpay all announced deals with Circle to add stablecoin capabilities and our technology into their product infrastructure that, combined, serves tens of thousands of banks and financial institutions.

Now turning to digital asset trading markets, which continue to remain a key priority and a significant growth opportunity for Circle. Since we launched initiatives to drive USDC in the digital asset markets in early 2024, our share of spot trading volume has grown from 1% to 10% in Q2. And through our partnerships and growth initiatives, we are highly focused on continued market share gains. Digital asset firms globally are focused on working with the most trusted and compliant leader in stablecoins.

To summarize, let me reiterate the advantages of our stablecoin network. Circle is uniquely positioned to lead in the mainstream adoption of blockchain and stablecoins. Our platform powers developers, enterprises and institutions to build on the Circle stablecoin network, leveraging our deep liquidity infrastructure and seamless global bank connectivity. We provide primary liquidity in every major financial center and have facilitated over $1 trillion in USDC issuance and redemption since 2018.

With Internet scale distribution across wallets, payment providers, banks and exchanges worldwide, Circle is becoming the default choice for institutions selecting stablecoin network.

Our market-neutral model invites broad adoption of our platform from even the most competitive players. Our trusted regulated status and long-standing policy engagement capped by the passage of the GENIUS Act fortifies our position as the industry's most reliable foundation.

Together, these strengths create powerful competitive bulwarks and network effects that compound driving exponential growth for Circle.

With that, I will turn things over to our CFO, Jeremy Fox-Geen.

Thank you, Jeremy, and good morning, everyone. I'm excited to be here with you all for our first earnings as a public company. I'll start by walking briefly through the fundamentals of our business and financial model and then turn to the financial and operating results for the quarter.

As Jeremy noted, stablecoins are network businesses with Internet scale potential. Successful networks are valuable and enduring. And our strategy is to build the largest stablecoin network.

We make money in 2 ways. First, we monetized the money stock on the network through reserve income, which we earn on the cash equivalent assets we hold to back our stablecoins.

And we are also starting to monetize certain transaction flows and elements of our network infrastructure. While these other revenues are small today, they are growing, are high margin and also have the potential to scale rapidly with network adoption and usage.

Finally, we are an Internet platform business with a highly scalable model and inherent operating leverage with the potential to deliver strong profit growth and margin expansion over time.

Let me now review the quarter. Circle's stablecoin network continues to grow strongly. USDC onchain transaction volume was up 5.4x year-on-year. CCTP volume showed similar growth, up 4.1x year-on-year, demonstrating the importance of blockchain interoperability. Meaningful wallets, defined as wallets holding more than $10 of USDC, were up 68% year-on-year as USDC adoption continues to expand globally.

USDC in circulation stood at $61.3 billion at quarter end, up 90% year-on-year; and was at $65.2 billion as of August 10, up 6.4% since quarter end.

USDC held within Circle's platform infrastructure grew 10x year-on-year, reaching 10% of total circulation at quarter end as more partners build using our platform infrastructure.

The reserve return rate was 4.14% for the second quarter reflecting the decline in [ SOFR ] during this period.

Total revenue and reserve income increased 53% year-on-year to $658 million in the second quarter as growth in USDC in circulation was partly offset by a lower reserve return rate.

Total distribution transaction and other costs increased 64% year-on-year to $407 million. The increase was driven by higher average USDC balances held on Coinbase's platform and other partner incentives as we continue to build and grow partnerships to drive USDC growth and adoption.

As a result, our revenue less distribution cost margin was 38% in the second quarter.

Other revenue increased to $24 million in the second quarter, up 3.5x year-on-year. This was primarily driven by a $13 million increase in subscription and services revenue, mostly from our blockchain network partnerships. Transaction revenues grew strongly to $5.8 million in the second quarter, up from $1.6 million in Q1.

Our other revenues carry a higher margin than our net reserve margin and added 2.2 percentage points to margin overall in the second quarter.

Total revenue and reserve income less distribution, transaction and other costs was $251 million in the second quarter, growing 38% year-on-year.

Adjusted operating expenses which excludes depreciation and amortization, nonoperating digital asset gains and losses and stock-based compensation were $128 million for the quarter as we continue to invest in growing our platform at this pivotal moment for our industry.

Adjusted EBITDA was $126 million in the quarter, up 52% year-on-year and delivering a 50% adjusted EBITDA margin, reflecting the strong operating leverage inherent in our business model.

Now let me turn to our outlook. Our goal is to help investors and analysts understand our business and how we manage it as best as possible. We are at the beginning of meaningful structural shifts in the global markets for money, and we are managing our business for long-term success.

As such, we do not intend to give short-term quarterly guidance. We do intend, however, to give full year guidance on certain key metrics. We will evolve this guidance each quarter with our financial results, as needed.

USDC in circulation is not a forecastable metric in the traditional sense and is, in many ways, the outcome of an entire economy of activity. There is a growing body of third-party research on stablecoin growth with multiyear forecast CAGRs ranging from 25% to 90% with a median of 60%.

Our core model anticipates multiyear through-cycle USDC growth of a 40% CAGR, reflecting our conservative nature.

We anticipate other revenue to range between $75 million and $85 million for 2025, primarily driven by subscription and services revenue from our blockchain network partnerships, which can vary quarter-on-quarter, along with transaction revenues, which are small today but growing.

We anticipate an RLDC margin of between 36% and 38% for 2025. While RLDC margin for the first half of the year was 39%, we continue to invest in partnerships with industry-leading institutions to grow USDC adoption.

Adjusted operating expenses we expect will range between $475 million and $490 million in 2025 as we continue to invest in key areas to build out our platform, our capabilities and our global partnerships. This would represent a full year growth rate of between 20% and 24%.

In closing, we have had a strong first half and are executing at an accelerating pace against the significant opportunity in front of us.

Thank you to our investors and analysts for your support and engagement, and we look forward to updating you on our progress next quarter. With that, operator, we can now start the Q&A portion of the call.

[Operator Instructions] Your first question comes from the line of Joseph Vafi with Canaccord.

Jeremy and Jeremy, great results here, and congrats on your IPO, which was obviously a great success and your first earnings call.

Just a couple for me. One, the news on Arc, obviously, very exciting. Do you believe that the gas fees and the like are the first step here in the revenue model for USDC or maybe for transactions away from trading pairs and the like? Is Arc going to be -- and the gas fee is going to be kind of the basis for transaction piece here for broader transactions with USDC? And then I have a quick follow-up.

Sure. Thanks, Joe. Look, a few things here. First, we're very excited about Arc. There's a lot more information out about it. Arc, we want to underpin all stablecoin finance, payments, FX, capital markets, applications. And it's really designed to support mainstream regulated financial institutions who want to build onchain and build financial products and services onchain. And so we're excited, and we believe that a lot of traffic can move on to a network like Arc.

And yes, the gas fees, which are denominated in USDC, can become a source of revenue. And we'll certainly, as this goes into Testnet and ultimately launches on Mainnet, we'll have a lot more to say about that.

But I would also say, just to contextualize it, we have a number of transaction fee revenue streams that are emerging. And Jeremy referred in his remarks to the kind of growth in transaction fee revenue, which was very solid on an annualized basis, and we're continuing to see. So many new products and services that we're building include transaction fee components to them. And of course, that includes CPN as we scale that and it includes premium features of Circle Mint. It includes features of USYC, our yield token.

And so we're adding more and more transaction fee models, but you are correct that Arc does have a underlying gas fee transaction fee model built on USDC.

Sure. Great. And then just on the USYC theme, maybe drill down a little bit on that expanded relationship there with Binance with a focus on USYC and maybe just a little color on expanding that into USYC and not just USDC?

Sure. A couple of things of note. So as noted in my comments, we have expanded our partnership with Binance. That includes both around USDC and USYC. With USDC, they're continuing to adopt Circle wallet technologies. They're more -- they're sort of deeper support and integration with Circle's wallet technology, which is going to help promote and grow the use of USDC on their platform.

And so they've been a great partner, and they're leaning into both the technology and really driving USDC growth.

The partnership around USYC is really important. When we acquired the product and then very recently relaunched the product, we designed it to be something that could be used as a yield-bearing collateral instrument. And when you look at global exchanges today, and Binance is the largest global exchange, there's an enormous amount of collateral posted in those markets. And we believe that as institutionalization takes hold, that the big trading firms, asset managers, institutions are going to want to post yield-bearing collateral, but then actually trade with USDC.

And so the integration between USYC as yield-bearing collateral and USDC as digital cash that can be used as a relative margin in spot markets and the like, it's a powerful market structure. The fact that we're doing this with the biggest exchange in the world is really significant, and we hope and expect that we will deploy this kind of architecture in more digital asset exchanges, and ultimately, on major traditional clearinghouses.

Earlier in the year, we announced a collaboration with ICE. And within the context of that, the goal is to stand up the ability to support yield-bearing collateral like USYC, USDC as cash and settlement.

And so this new 24/7/365 market structure where you can seamlessly move between tokenized yield-bearing collateral and cash, we think it's the future of financial markets. And we're obviously excited about pioneering an implementation of that vision with the largest digital asset exchange in the world.

Your next question comes from the line of Pete Christiansen with Citi.

And certainly, we echo our congratulations on a very, very successful IPO. It's been a long road for you guys, so congratulations.

Jeremy, I wanted to ask, and we get this question quite a bit from investors, is trying to understand the transaction volume versus the circulation. Obviously, transaction volume growing way faster. So the question kind of comes down to trying to understand the velocity of each token and how that relates to circulation overall. Just if you could if you could dimensionalize that for us to help us better understand that relationship would be super helpful.

Yes, you're welcome. Thanks, again. A couple of things of note. I think, obviously, you're absolutely correct. The money stock, which today is sitting at around $65.6 billion of USDC versus the amount of transactional volume that happens onchain, that's, by the way, not including transactions that are happening on exchanges, which is sort of off-chain transaction volume. But the onchain transaction volume, what you note is that a dollar digital currency such as USDC has very high velocity. And I think in part that is based on the fact that blockchain-based transactions now through the development of mature blockchain networks allow transactions to happen in fractions of a second and fractions of a cent.

And so the kind of the speed with which transactions can happen, the ability to move the digital dollars all around the world seamlessly, to move them between different protocols for investment or for payments, it is a higher velocity form of money. And I think just like data moves a lot faster than your newspaper delivery or your video call moves a lot faster than a letter, Internet-native architectures for money are going to allow for higher velocity money overall.

Now in terms of the connection between that money velocity and kind of core stablecoin money supply, I mean, I think there's correlation. You can sort of see that correlation. But we've also seen that over the last year, transaction volume growth has been higher than the stablecoin money supply growth. And I think, in part, that reflects the improvements in blockchain technology infrastructure so that it is faster and cheaper and easier to move these digital dollars around.

And that also, I think, reflects the growth in payment utility that we're seeing for these in emerging and developing markets and peer-to-peer transactions. And so I think it's a mixture of things like that we look at.

And I think from a very long-term perspective, we certainly are interested in kind of the monetary theory that will go behind this new Internet financial system and money velocity, and ultimately, how we think about kind of macro aggregates in terms of impact on economic activity as a whole, but that's a ways off.

That's helpful. And then as my follow-up, I'm curious, CPN seems to be off to a great start here. A ton of new partnerships that you signed up, some marquee ones, in fact, Curious what's the next milestones for CPN as you're looking for that network to grow? And what is the inter-relationship, I guess, between -- that you envision between CPN and Arc in the future?

Sure. It's a great question. So we're very happy with the initial launch of CPN. We launched it, as you know, just very recently in what we consider to be the pilot phase. We've had a tremendous amount of demand from financial institutions that want to become members and want to participate on CPN.

Really, the first phase has been about getting a few key high-priority corridors active on that. So we've been able to bring 4 corridors, Hong Kong, Brazil, Nigeria and Mexico on. And as we look at the priorities for ourselves between now and the end of the year, let's just say, we want to bring significantly more corridors on so that money flows can work seamlessly across major developed markets and more emerging and developing markets. And so that's a big focus, and making sure that we can provide sufficient liquidity across those corridors so that people who want to move volume through this can. So really, activation of corridors is key.

There are a lot of product features that we are developing in response to what the market has told us they need. And so 1 of the things that we found is that the number of institutions that want to onboard and become integrated and activate on the network sort of outstrips our capacity to bring them on.

And so we're making self-service product dashboards, self-service tools for kind of configuring the way flows work for these institutions. And so that is key, those key product investments, and we hope to bring a significant number of new members on. And obviously, our ultimate ambition is that thousands of members will join CPN and participate in a wide array of payment flows.

On the second follow-up question related to Arc, we do see Arc playing a very important role with CPN. Arc is designed to be a purpose-built blockchain for stablecoin finance for payments, FX and capital markets. And you will see in the lite paper that was made available on our website just shortly ago that Arc itself will include a native FX engine and FX platform within it. Arc will include configurable privacy and opt-in confidential transfers, very important features for money flows between financial institutions. And then obviously a straightforward kind of security and gas fee model.

All of those are attractive for what we're building for Arc, and we certainly hope that many of the financial institutions that are implementing and integrating with Arc will use our CPN -- excuse me, will use Arc network as a key kind of back plane for their payments and financial applications.

Your next question comes from the line of Ken Worthington with JPMorgan.

I wanted to follow up on payments. The payment opportunity seems to be developing quickly. You guys launched CPN and Coinbase announced Shopify and the building on the Coinbase commerce platform. To what extent are these networks sort of complementary versus competing?

And ultimately, is it important for Circle to be the dominant payment network? Or is it better to be sort of one of many networks as long as they're sort of focused on -- in utilizing USDC?

Thanks, Ken. It's a great question. There are a few pieces to this. So first and foremost, USDC as a stablecoin network is a market-neutral infrastructure, which many, many different types of companies are building on top of whether those are capital markets firms, trading firms, exchanges, brokerage platforms, neobanks, traditional banks, payment service providers. There's a huge array of companies networks themselves, like Visa and Mastercard, increasing their use of stablecoins and USDC, specifically as well.

So we expect many different payment networks and many different capital markets, exchanges and others to build on our stablecoin market infrastructure. We view that as very valuable in growing use cases, very valuable in growing distribution. It can be very valuable in growing the adoption of other technology protocols and services that we also monetize. And so broadly, we've got a big tent mentality here and we want to see a lot of success across many different types of companies.

Now I think, secondly, when Shopify launches USDC payment acceptance and they're using a product from Coinbase to do that, that's great. That's exactly what we want to see from our partners like Coinbase and others. We want to see people building and integrating USDC into commerce flows and into other types of applications.

And so as Shopify merchants can accept USDC, that grows the utility of the stablecoin network. That means that digital wallets that are in the hands of the hundreds of millions of Binance users or the hundred million Nubank users or users who use different digital wallet products all around the world that support USDC, that they now have something that they can do with that and transact with that.

So that grows network value for Circle and it expands the utility, and that's part of our competitive moat is this expanding utility through developers that integrate this and deploy this in different ways.

I would also say, just as a kind of comment just in general, we are seeing incredible demand and acceleration from firms in the payments industry, from firms that build infrastructure for supporting payments with a wide variety of companies. Just in recent weeks, we've announced partnerships with Fiserv, FIS, Corpay, Matera and these are firms that provide core infrastructure, including payment infrastructure to tens of thousands of banks and financial institutions, and they're integrating our technology. They're integrating USDC and that's really tremendous and I think just represents that there are going to be many, many different networks and many, many different distribution points for how this comes into payments.

Obviously, CPN is a very important initiative from us and we want that to be a very, very successful general purpose onchain payments network. We believe that the model we're putting forward with CPN is going to be very attractive to financial institutions and ultimately to the customers that they serve.

Okay. Amazing. And then the Circle IPO, obviously, a huge success here. You now have a really valuable currency. What are your thoughts on leveraging the value in your stock to drive additional shareholder value through various means. Is there an opportunity?

Yes, I can comment on that. I think, first and foremost, virtually everything that we do has overwhelmingly been the result of organic product development. We are a technology company. We're a software-driven technology company. And we like to build, we like to innovate. But we certainly, from time to time, find teams, find intellectual property, find complementary technology that we do want to add to the portfolio.

And in fact, this morning alongside the announcement of Arc, we announced a small acquisition of both a team and intellectual property that is very important intellectual property in this next generation of stablecoin finance blockchains. So that's an example where we have done that. And earlier this year, we acquired another firm that had a team and core intellectual property around privacy and confidentiality in blockchain.

And so we do see opportunities to use our currency to do M&A. But we're careful and deliberate, and I don't think our strategy here is to go try and do big complex acquisitions to kind of throw kind of additional business lines next to what we do. I think we take a kind of full stacked, integrated platform view of what we do. And so we want to -- we only want to do things that really fit clearly in that kind of product mandate. We've got a lot of organic development happening now, and we're excited to deliver on that.

Your next question comes from the line of Owen Lau with Oppenheimer.

So first of all, congrats on the quarter and congrats on the successful IPO. For my question, could you please talk about the adoption of USDC in remittance. I know you have some partnerships with remittance companies, but some others are thinking about creating their own stablecoin as well. How do you gauge the adoption here? Is there any way you can quantify for us the penetration for USDC so far?

Yes, it's a great question. We certainly have continued to see demand in remittance. And by the way, remittance that we observe is both kind of family member to family member or kind of individuals. But there's a lot of B2B remittance meaning companies that may have overseas operations and need to remit capital back to, say, the United States or Asia or Europe and so -- which is more like a treasury flow. So -- but those kinds of cross-border flows we're seeing proliferate.

We have more and more partnerships that are coming online in this use case. We obviously, in the quarter, had several prominent cross-border fintechs expanding what they're doing with USDC, Remitly, MoneyGram, ZEPZ as well, all of whom have sizable franchises. And CPN itself, the primary use case on it is remittances, both consumer to consumer and B2B. And so we're seeing that as the first major use case on Circle Payments Network as well.

I would also say there are indirect things that we look at. So for example, kind of peer-to-peer flows in different markets around the world. We kind of try and monitor those peer-to-peer flows through various websites that provide data on that. And we've grown our presence in those peer-to-peer flows fairly considerably over the last year.

In terms of the general question of other stablecoins, I mean, I think the key thing to understand is that what makes a stablecoin network good for remittance is the liquidity of that stablecoin all around the world. And so what we've been able to do, both through primary and secondary liquidity, is create a tremendous liquidity network.

And what does that mean? That means that if I have USDC and I send it to a person in Brazil, it's fast and cheap to get that into a Brazilian bank account in reais. And all around the world, there are these on- and off-ramp companies that support USDC. So we've built the liquidity network, which eases the way in which people can seamlessly move value and move value in and out of different currencies, e-money systems and banking systems.

And so that liquidity network, which has been many, many years of work with regional banks, global banks, payment service providers and others is really something that is very, very difficult to replicate. And so just having a coin doesn't actually really solve a problem in terms of the ultimate delivery of money and the settlement of money and the liquidity of that against all of these different parts of the global financial system.

Got it. That's very helpful. And then as my follow-up, could you please add more color on your partnership with OKX, which is a very large exchange in Asia as well? What is the economic arrangement look like? And how does this deal different from other deals such as Binance and Coinbase?

Sure. So the first thing I'd say is digital asset markets are a critical market for us. They continue to grow. They're very sizable. There are many companies, both regional companies and global companies, that are critical there. We have been growing our participation in those markets fairly materially. Our share of spot market volume on the major exchanges grew tenfold over the last -- since beginning of '24. And so we're really focused on that.

And I think as kind of compliance and regulatory integration and having trustworthy stablecoins becomes more important, we're finding more opportunities to partner with the biggest exchanges. Now Coinbase had a head start. They were the first big exchange to really bet on USDC, and that's been great for them.

Obviously, we established a partnership with Binance. We've expanded that partnership with Binance and they're the largest exchange in the world.

And with OKX, getting back to your question, we're very excited about the expansion of our relationship with OKX. We don't disclose the material or commercial terms of the specific transaction. But what we've characterized is that they're adopting Circle wallet technology. And we're offering them integration into our core Circle Mint infrastructure, so that they can provide the institutions that are coming to their platform with the best possible liquidity experience with USDC.

And so they have 60 million users. This is going to help promote USDC to those 60 million users, growing, again, the value and reach of our network and the utility of USDC. And we hope to do a lot more with OKX as they also become a much more regulated player, regulated in Europe. They're obviously have publicly talked about their launch in the United States. And so it's a very solid firm with a global franchise and an important expansion of our strategy in digital asset markets.

Your next question comes from the line of John Todaro with Needham.

Congrats on a great quarter and the rollout of Arc. First question related to Arc, how distributed is the goal for Arc from kind of a node operator validator standpoint? How do you ensure gas fees remain low? And then I have a follow-up question.

Sure, absolutely. A couple of things. So one is, I would highly encourage you to read the lite paper, which was made available this morning, and we talk a little bit about some of these issues there. So there is a novel fee mechanism that we have designed for Arc, which will ensure predictable low costs for transactions and obviously those transactions priced in USDC.

I believe there'll be subsequently significantly more information about the fee market mechanics as we go into kind of public Testnet, but there's a novel approach that we're taking there. It's very important if you're a financial institution or a commerce firm that you have low and predictable fees and fees that you can pay in real digital cash. And so that's very important.

And then in terms of distribution, I think we ultimately aspire that Arc is operated by a fairly large distributed network of professional validators. We are very focused on vetted professional validators that can meet the operational security and compliance expectations for people running this critical infrastructure. We want that to be highly geographically distributed. We want that to be distributed across major institutions as well.

And so, I think we ultimately believe that this is a tremendous opportunity for financial market utilities, for financial institutions, for large existing major firms in validator infrastructure. And so we have a whole vision and go-to-market that we're thinking about there. And again, we're in the early stages of standing this up. But that -- I think the lite paper touches on this issue as well in terms of how we're thinking about that evolution.

Great. And then just as it relates to GENIUS -- so if you look into sort of the Tether circulating supply growth, seems to have kind of done this leveling off since July 27. USDC has continued to have growth since then. When you talked earlier about seeing some of that momentum or effects from GENIUS Act, was that sort of what you're hinting at? Do you think that's a result of GENIUS or not really seeing the effects yet from that standpoint?

Yes. I mean, it's hard to specifically correlate the kind of the rapid acceleration in USDC growth over the past 1.5 months or so with a specific legislative outcome. I think one could broadly say awareness of USDC is growing around the world. Awareness of USDC as a product that is sort of purpose-built for what the GENIUS Act represents is interesting and whether that's affecting user preference, it's very, very hard to know.

But my comment, I think, that you're referring to is much more around commercial engagement. Since the Circle IPO and since the final passage of GENIUS Act into law, we have seen just an incredible amount of inbound interest from financial institutions across every sector of the financial industry from major technology companies, from large enterprises and we're seeing that interest coming into us from all around the world in all the geographies that we're in.

And so I think this has been a catalytic moment for mainstream institutions to say, okay, now I can play. Now I can build. Now I can work with this technology. There's obviously also been regulatory relief in the United States for financial institutions to engage in the space, and that's obviously been additive as well.

And so we're just seeing the kind of commercial opportunity set that's coming in for us right now growing considerably, which is really exciting. And I think that this is very much something that we talked about while we were going through our IPO and engaging with the market, which is that we believe that GENIUS Act would be an important catalytic moment and a tailwind to adoption of what we're doing.

And now we've got to kind of grab those opportunities and make sure we're building the right products and services for these partners. And critically make sure we can put together win-win economic relationships where these customers can deliver value for their customers, they can grow economically, we can grow economically. And that's very much our fundamental philosophy as we partner with firms around the world.

I'd just add on to that. GENIUS has clearly been a major catalytic event from that interest from major financial institutions across every segment of financial activity.

I'd make one sort of cautionary note though. While absolutely necessary for this accelerating growth in USDC and in the Internet financial system, financial services companies, particularly the largest ones, integrating with new technologies and rolling that out to their customers typically takes time.

And what's tremendous about where we sit is they're exploring deep integrations with us, which leads to stickiness over time. But at the same time, the speed of their rollout will be dependent upon them and their own abilities internally to make progress.

Your next question comes from the line of Jeff Cantwell with Seaport Research.

First of all, congrats on the IPO. Also on the passing of GENIUS Act, Jeremy, was being signed, I was thinking about you and many others involved in the crypto industry. It probably was a long journey getting to that point. So I want to say congrats to you and to everybody who helped to make that happen.

Can you maybe talk about what you've seen, as sort of follow-up on the previous question. Post the GENIUS Act's passing, it looks like your USDC in circulation was $61 billion in Q2, now in August it's $65 billion. So it does sound like you're seeing increasing demand. And I was hoping you can maybe give us a little color as to what you're seeing since the GENIUS Act was passed just a few weeks ago. Was it more domestic or international growth? Can you just talk more about that?

And then also wanted to ask how are you thinking about the growth in USDC from here? You're talking about a 40% CAGR. So how would you describe where you expect to see that growth come from? Would you mind just bucketing what are the incremental opportunities for USDC as you think ahead, that would be great.

Sure. I'll take part of that, and I'll have Jeremy Fox-Geen take part of that as well. So I mean, the post-GENIUS demand, again, as we just talked about, I'm mostly characterizing that around institutional interest in building on our stablecoin network. Institutional interest in working with Circle, which, as Jeremy Fox-Geen just noted, these institutions and putting together relationships, implementing product, getting those products out and scaling will take time.

I think the more recent growth, as I see it, reflects a kind of green light/go view within the global environment to utilize stablecoins. That has certainly been fostered by the increasing activity in digital asset markets. But I think it's broadly a kind of a signal to the market that this is now a form of digital cash-like instrument that can be utilized.

And so it's going to be interesting to see, and I know that ties into your other question about growth. Obviously, with recent acceleration, we've grown 90% year-over-year and 49% year-to-date.

But in terms of how to think about that going forward, I know Jeremy Fox-Geen, you have some thoughts on that and just our general philosophy around how to think about that because it is not a straightforward thing to guide on, hence, the approach that we take.

Thank you, Jeremy. I'll talk a bit about kind of how we view -- you referenced the 40% number we put out, how we view that. As I said in my remarks, right, the growth in USDC in circulation, in many ways, is the output over an entire economy. The digital asset markets with a bootstrap use case for stablecoins and represent the largest part of that economy today, but as I think we've been talking about on this call, we are seeing accelerating interest and growing adoption from every major financial services vertical for whom these new money technologies can bring tremendous advantages.

This is very early days. We are right at the beginning of building the Internet financial system. And there's a multiyear, if not multi-decade, growth for these new technologies within financial services.

Specifically as to guidance, there is a growing number of third-party research firms, financial industry analysts, who are publishing research on stablecoin growth. And they all see not just the promise that I touched on, but multiyear CAGRs and those growth rates range from kind of 25% CAGR at the low end up to 90%-plus CAGR at the high end with, from our reading, the best current median at around a 60% CAGR.

We believe in the benefits of these new technologies very, very strongly. When it comes to guidance, our core model, and we run a range of scenarios to enable us to manage the business in an uncertain environment, but our core model suggests a 40% CAGR and if we can deliver that in terms of USDC growth, we believe that will deliver a compelling financial return for our investors.

Got it. Okay. Great. And maybe as a follow-up, one of the frequent questions we've been asked for clarification on about your company post the IPO is where is the onchain transaction volume coming from? Can you walk through that in more detail? You just reported $5.9 trillion in onchain.

So maybe can you discuss the use cases, maybe even geographically where the transactions are coming from. I think a lot of the interest is because public investors are still trying to get a better feel for the world of crypto, whereas the world of fiat up still is much more familiar for the obvious reason here in the U.S. So maybe can you talk to us about where the $5.9 trillion is being generated, that would be very helpful.

I can touch on that. And I think as you know, public blockchain data does not include geographic IP addresses or things like that, but there are very good heuristics to look at this. And in fact, I think there are some excellent third-party research firms that do focused research on blockchain data, blockchain analytics. And we look at that and look at other data sources.

What I can certainly say is it's highly distributed geographically. There's an enormous amount of traffic in USDC that is around the world: Europe, Asia, emerging and developing markets, Latin America, Middle East, Africa, Southeast Asia. So it is very geographically distributed and while the U.S. is important, it is not the majority.

And so we see that geographic distribution in the data that we're able to look at. And obviously, we can identify activity that is specifically USDC that's moving between exchanges or super wallets and things like that. And oftentimes, we'll correlate that to investing activity, savings activity, but also for payments activity.

We know, for example, that peer-to-peer payments in emerging developing markets using stablecoins are a significant use case. But most of those peer-to-peer payments are intermediated by the big wallets that are attached to these big kind of, what I think of, as financial super apps like the Coinbase products or the Binance products where people in those markets are using them not just for trading and investing, they're using them for savings to earn yields and for P2P payments as well.

And so once USDC gets into one of those big platforms, we can't track inside of there exactly all the flows and what people are doing. But those are some comments that I can give. I don't know, if you want to add anything, Jeremy.

Yes. I'd add on a little on to that just to give kind of a top-down conceptual understanding of what this even means, right? In today's world, every money movement use case, so I think kind of consumer payments through credit card networks, remittances, international kind of money transfers via Swift, every single use case effectively has a different technology delivery stack.

With the Internet, we are seeing the emergence of the first-ever general-purpose architecture for money movement. And so onchain transactions include money movement across all financial services use cases, which is almost a radical difference, certainly a tremendous difference to the existing system.

So what does that mean? When we think about those use cases, just as examples, Visa moved somewhat north of $10 trillion a year through its consumer-to-business and business-to-business rails. And that's one number that's off-sited. But let's not forget JPMorgan, as an example, moves somewhat north of $10 trillion a day in gross money movement and gross money settlement as well as other use cases.

And so all of that is intermingled in onchain transactions for stablecoins. And so, as Jeremy said, it's difficult to disaggregate all of those different money uses, but we should not forget that all of those money use cases are represented in these numbers.

Your next question comes from the line of James Yaro with Goldman Sachs.

I just wanted to ask, firstly, on the outlook for non-dollar stablecoins and the necessity for growth of these, in your view, to facilitate stablecoin cross-border payments and thus CPN.

And then perhaps just how you can, I guess, to what degree you plan to facilitate that with EURC?

Thanks, James. It's a good question. So over the long run, we are very optimistic that virtually every major country in the world will have a good stablecoin policy regime and that we'll see proliferation in high-quality regulated payment stablecoins. We believe GENIUS Act is actually driving that and we're seeing that with legislators and governments around the world who are now really racing to get their stablecoin policies in place. And so we do expect that proliferation.

We want to work with these non-dollar stablecoins. We obviously issue EURC and that has done well. But we want to work with these non-dollar stablecoins because onchain money is more effective and efficient money. It's programmable money. And from a cross-border perspective, if you can have a 24/7/365 continuously settled, atomically swappable PvP exchange, that's a very powerful building block.

And it's one of the reasons why we are building such an engine into our own core blockchain network Arc is that we want to see that mature because we think that as a, again, a programmable building block for a commerce, trade and various types of capital markets activity, that's going to be really important.

Now short of that all maturing, and we do believe it will mature, it is not necessarily an impediment to growing use of stablecoins in cross-border settlement. And CPN itself really from the start, the kind of FX model is designed to connect stablecoins to local currency liquidity and local electronic money rails.

And so a person sending money from Portugal to a person in Brazil, they might have EURC or USDC sitting on one side of that transaction. And on the other side, there are essentially takers of that, what we call our DFIs, who have liquidity of USDC against local Brazilian real. And they can effectively price against existing kind of prices in the market or they're competing on price and then they can effectively use the immediate credit of the USDC to then initiate that near real-time payment on the ultimate bank transferred money.

And so there are ways to do that. And there are also ways to have the onchain FX market basically be an onchain FX market where the market and the pricing is all completed, but where the fulfillment on the currency side is kind of post trade. And so that's also a structure that we expect to see develop more as well.

But again, long term, we're very much encouraging of and want to see more and more what we call the local partner stablecoins. We want to see them issue on the Arc blockchain. We want to support them on CPN. We want to support them in Circle Mint and in our wallets. And we want to be very multi-stablecoin in what we do, and we believe that's part of building the Internet financial system.

Very clear. On another topic, maybe you could just talk a little bit about the opportunity for Circle Gateway and then perhaps how this, I guess, differs or integrates with Circle CCTP?

Yes, absolutely. So Circle Gateway and Circle CCTP saw similar, but somewhat different problems. So CCTP is a protocol at a kind of low level. It's a low-level protocol that allows for cross-chain settlement of USDC across a multitude of different blockchains. It's used quite significantly in cross-chain USDC today. The last time I looked, I think it was well over 80% of cross-train USDC was running through CCTP. And we have a version 2 of that, which has continued to grow as well.

So that allows -- that's kind of a more lower level in a sense. And it doesn't solve kind of what we think of as like the user experience problem. In a world of CCTP what we find is that there are a lot of wallets, whether it's an institutional wallet or a consumer wallet, where you still end up in a world where you need to kind of know like which chains do I have USDC on and which chains do I want to get the USDC to? And so the UX is a hurdle.

And so Circle Gateway is really designed as an abstraction to eliminate that user experience hurdle. So a user, again, this could be an institution or an individual just sees a USDC balance. So they say, I have 10,000 USDC and they can essentially spend that balance in less than a second to any of the supported chains.

And so you can kind of just say, hey, I have USDC, what kind of wallet do you have or give me a QR code or give me an address. And it can spend seamlessly to those. So it really simplifies the UX. This is part of our goal of just kind of having the crypto disappear into the background and make this a more streamlined experience.

So Circle Gateway is a different architecture to accomplish that. And it's something that we're really primarily bringing to market through developers who are going to integrate this into their products and services. And like CCTP version 2, it also does include new opportunities for monetization for Circle. And so simplified user experience is a feature, we want to monetize that and also just make these products better for people who are using them.

Your next question comes from the line of Brian Bedell with Deutsche Bank.

Great. And also congrats on the very successful IPO. Maybe just a big picture question on growing USDC over time within the industry and the desire to make this a winner take most and increase the scale and network effects of USDC.

I guess, Jeremy, what's your appetite for partnering with more institutions? And if that means higher distribution costs and lower reserve margins, is that something that you find appealing to grow USDC or do you really think about the reserve margin is something you want to keep in that mid-30s range at least?

Yes, I can take part of that and maybe Jeremy Fox-Geen can take the other part of it. So first of all, we have a very strong appetite for growing the partnerships that are going to grow our network. And I would say it's helpful to kind of remind folks that we have many, many different types of partnerships. A partnership with a digital wallet is completely different than a partnership with a merchant acquirer, which is completely different than a partnership with a large exchange that has hundreds of millions of users. So there are many, many different types of partners that we work with.

And each one of those partnerships has a unique deal format to it. So we have a lot of different deal playbooks that we execute. And I think it's sort of simplistic to think that every deal has to do with giving away reserve income, that is not the case. We focus on partnerships where each party is, a, focused on delivering value for their customers. So how are they going to grow value for their customers through this partnership; and b, that it's a win-win, growth-oriented model. So we want to build economic relationships that incentivize growth so that we're seeing that the partnership is actually having an impact on whether it be transaction velocity or market share shift or USDC growth itself. So we really focus on these win-win, growth-oriented relationships.

It's not a carte blanche, here's a rate card, go do this kind of thing. We want to build, we want to build with people who want to build and grow with us and that's our filter for this. And I think that, that is working.

I think, Jeremy, maybe you can comment more on just sort of how we think about that vis-a-vis our RLDC margin and the outlook there.

Thank you, Jeremy. I'll build on that and then get to the numbers piece of it. But it's important to understand that the strength and breadth of our platform capabilities, combined with our position as market-neutral infrastructure, encourages more players and enables even fierce competitors, right, to build on and integrate with our platform.

And so our partners then bring the benefits of these new money technologies to their customers, benefiting their customers, building their business and growing USDC usage and adoption, which strengthens our network with more capabilities, more users, more distribution. And this is a network business with network effects and our position strengthens as the network strengthens.

And that's important context for our future outlook on RLDC margin. We're not guiding beyond 2025 at this time. However, I think of 3 factors that provide relative strength tailwinds, if you like, relative strength to this margin over time.

The first would be the growing strength from network effects, which is what I was just talking about. And we see that in our commercial discussions. And we also know that, and this is important to remember, growth in USDC held within partner infrastructure and which may be subject to incentives also leads to growth in USDC in the ecosystem more broadly held outside of partner infrastructure. So we see growing strength from network effects. That's the first point.

The second we see growth in USDC held within Circle's platform infrastructure. We have a broad-based feature-rich platform, as I just mentioned, and our position is market-neutral infrastructure only enables more people to build upon our platform over time. And that's important. And we have greater economic flexibility with USDC held within our platform infrastructure.

And then finally, we have growth in our high-margin other revenues, right? Predominantly today, we make money from the stock of money on the network. Over time and through products we've already launched and started talking about even as they're nascent today, we will be monetizing certain of the flows across that network infrastructure where we are able to add value-added services to the benefit of the users. And so we see this growth in other revenues over time, and those are very high margin revenues and provide strength to our overall margin over time.

So those 3 things combined, we think, provide longer-term relative strength to our RLDC margin.

That concludes our question-and-answer session. I will now turn the call back over to John Andrews for closing remarks.

Great, Tiffany, thank you. And apologies for a couple of people who got stuck in the queue, but we are up against a hard time end here. We are happy to follow-up with everybody. You know how to reach us through the investors website at circle.com, and enjoy the rest of the day.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.