Author: Lucas Shin
Compiled by: Deep Tide TechFlow
Deep Tide Guide: The market treats Circle as an interest rate-sensitive money market fund, but USDC supply grew by 72% even as interest rates fell. What is even more overlooked is the wave of AI agent commerce: McKinsey predicts agent transaction volume will reach $3-5 trillion by 2030, and of the $106 million transaction volume of the HTTP payment standard x402, 99.6% was settled using USDC. This is a structural opportunity for stablecoin demand, not a pure interest rate bet.
Conclusion:
The market prices Circle as an interest rate-sensitive money market fund—a bet on the Fed funds rate sitting on a blockchain track. We believe this framework misprices the business. USDC supply grew 72% in 2025 to $75.3 billion, even as the Fed cut rates by 75 basis points in the second half, indicating that USDC demand is driven by real utility adoption, not purely yield-seeking behavior. Our baseline forecast predicts the total stablecoin market will reach approximately $1.5 trillion by 2030, with an average USDC supply of $284 billion. Even as reserve yields are expected to compress, we forecast Circle's reserve income will grow to $9.2 billion by 2030 (about 3.5x from 2025's ~$2.64B), as supply growth overwhelms interest rate compression. Combined with the expansion of the Circle Payments Network (CPN) to $350 million in revenue and a reduction in distribution costs from 60% to 55%, our baseline scenario forecasts total revenue of $9.8 billion and net income of approximately $1.84 billion in 2030.
Several tailwinds support this trajectory: the GENIUS Act creates a federal stablecoin framework favorable to compliant issuers; the Circle Payments Network is gaining early traction with 55 financial institutions registered and an annualized transaction processing volume of $5.7 billion, providing a transaction-based revenue stream that diversifies away from interest rate sensitivity; stablecoin adoption is expanding in B2B payments, cross-border settlements, and DeFi. Our baseline scenario yields a forecasted 2030 EPS of $6.73, implying a target price of approximately $168 at a 25x terminal P/E ratio, representing an 83% upside from current levels.
Comparable Companies Table:
There are no direct listed comparable companies as stablecoin issuers monetizing through reserve float. Our comparable set includes companies that share key attributes with Circle's business: float-based revenue models (Charles Schwab, Interactive Brokers), digital payments infrastructure (PayPal, Wise, dLocal, Bill.com), crypto-native platforms (Coinbase), and high-growth infrastructure with usage-based economics (Snowflake, Confluent).
What Does Circle Do?
Circle is the issuer of USDC, a USD-denominated stablecoin pegged 1:1 to the US dollar. USDC is minted when users deposit dollars and burned when they redeem. The yield generated from the reserves (approximately 43% reverse repo, 43% Treasury bills, and 14% bank deposits, custodied by BNY Mellon and managed through BlackRock's USDXX fund) constitutes Circle's primary revenue.
Key cost structure details: Coinbase, as the primary distribution partner for USDC, receives 100% of the reserve income from USDC held on its platform and 50% from USDC held off-platform. In 2025, Coinbase received $1.35 billion, accounting for 51% of Circle's total reserve income. Including non-Coinbase distribution (12.7%), total distribution costs consumed about 61% of reserve income, leaving a 39% gross margin. We forecast distribution costs to decrease from 60% to 55% by 2030, as non-Coinbase distribution grows and new financial institution, bank, and custody partners negotiate deals more favorable than Circle's current agreement with Coinbase. This drives gross margin expansion from 39% to 54%.
Beyond reserve income, Circle's most important growth lever is the Circle Payments Network (CPN), a cross-border B2B settlement network built on USDC. Launched in May 2025, CPN has registered 55 financial institutions with an annualized transaction processing volume of $5.7 billion and a pipeline of 500 financial institutions. We forecast CPN will expand to $175 billion in transaction processing volume by 2030, with a 0.2% fee rate (consistent with a blended cross-border rate of 20 basis points), generating $350 million in transaction-based revenue. This revenue is insensitive to interest rates, diversifying Circle away from pure reserve yield dependence. Additional revenue lines (termed "Other Revenue" in our model) include CCTP (47-50% of cross-chain bridging transaction volume) and the Arc settlement infrastructure, which we forecast will total $207 million by 2030.
Thesis #1: Supply Growth Overwhelms Interest Rate Compression
The total stablecoin market expanded from approximately $137 billion in 2022 to about $308 billion in 2025. Our model forecasts about $1.5 trillion by 2030, a ~37% CAGR. Today, the total stablecoins in circulation (~$316 billion) represent about 1.4% of the $227 trillion US M2 money supply. Our baseline implies about 6%, still a modest share of USD-denominated liquidity.
We forecast USDC maintains a 22-25% market share (modestly declining from 24.8% as white-label and bank stablecoins fragment the space), resulting in a $338 billion USDC supply by 2030 (~4.5x growth from today). Simply put, the sheer growth in USDC supply from $63 billion to an average of $284 billion is enough to compensate even if Circle's effective reserve yield declines. The result is reserve income growing 3.5x, from $2.64 billion to $9.24 billion.
Thesis #2: Agent Commerce Will Drive the Next Wave of Stablecoin Demand
AI agents are on a trajectory to autonomously execute transactions by 2030. McKinsey predicts global agent commerce sales will reach $3-5 trillion by 2030; Gartner estimates AI agents will intermediate over $15 trillion in B2B procurement by 2028. These transactions structurally require stablecoin rails:
Stablecoins are becoming the settlement layer for this emerging agent economy, and Circle's business model scales accordingly. When agents hold USDC in wallets to fund autonomous transactions, Circle earns yield on every dollar sitting in those reserves. The larger the pool of USDC held by agents, the larger the revenue base, regardless of transaction frequency.
USDC is already the default stablecoin for agent payments. In the six months since the x402 payment standard (HTTP-native micropayments) gained traction, it has processed approximately 17.7 million transactions, representing about $106 million in transaction volume. Over 99.6% of this volume was settled in USDC.
First-mover advantage creates a flywheel: new builders default to supporting USDC because it has the deepest integrations, which further deepens integrations and makes alternatives harder to break through. We do not model agent revenue in our base case, but agent demand is embedded in our bull case as upside optionality. If 1-2% of McKinsey's low-end $3 trillion forecast settles on USDC rails, this implies $30-60 billion in incremental USDC float in agent wallets from which Circle could earn passive yield.
Valuation & Scenarios
We value CRCL using a terminal P/E multiple on our 2030 forecast EPS. Our base case generates $1.84 billion in net income on 273.9 million diluted shares, resulting in an EPS of $6.73. A 25x terminal P/E multiple—above the comparable weighted average, reflecting Circle's structural growth trajectory, CPN-driven revenue diversification, and regulatory moat—implies about $168 per share in 2030, representing an 83% upside from current levels.
The 25x multiple sits between JPMorgan's (JPM) ~15x and Coinbase's ~38x, appropriate for a high-growth infrastructure business transitioning to recurring, rate-insensitive revenue.
Base Case: Assumes continued execution on supply growth and CPN expansion, with the stablecoin market reaching $1.5 trillion and USDC maintaining a 22.5% share. Distribution costs modestly decline to 55% as new financial institution partners negotiate lower revenue shares. Exiting at a 25x terminal P/E multiple on 2030 forecast earnings implies a target price of $168.34—82.7% upside, 16.3% IRR.
Bull Case: Assumes accelerated stablecoin adoption driven by favorable regulation, CPN network effects, and broad TradFi access. Total stablecoin market reaches $2.3 trillion, and USDC gains a 30% share. Distribution costs compress to 50% as non-Coinbase origination expands. Exiting at a 35x terminal P/E multiple on 2030 forecast earnings implies a target price of $482.10—over 423% upside, 51.2% IRR.
Bear Case: Assumes slower stablecoin adoption, white-label stablecoins erode USDC market share to 20%, and rate cuts compress reserve yields to 2.75%. CPN traction disappoints. Exiting at a 15x terminal P/E multiple on 2030 forecast earnings implies a target price of $46.92—approximately a 49% downside, -15.5% IRR.
We believe management quality is above average in the crypto infrastructure space, with particular strength in regulatory navigation (49 state MTLs, first MiCA compliant).
Jeremy Allaire co-founded Circle in 2013 and serves as Chairman and CEO. A serial entrepreneur (former CTO of Macromedia, founder/CEO of Brightcove, IPO 2012), Allaire pivoted Circle from a consumer payments app to stablecoin infrastructure, launching USDC with Coinbase in 2018, and completed a traditional IPO on the NYSE in June 2025 after a failed SPAC in 2022.
Heath Tarbert serves as President, promoted from Chief Legal Officer in January 2025. Tarbert is the former CFTC Chairman and CEO (2019-2021), former US Treasury Assistant Secretary, and former Chief Legal Officer of Citadel Securities.
Jeremy Fox-Geen has served as CFO since January 2021. Former CFO of iStar/Safehold (NYSE-listed REITs) and CFO of McKinsey & Company's North American operations. He oversaw Circle's IPO and manages the reserve architecture supporting over $70 billion in USDC circulation.
Dante Disparte serves as Chief Strategy Officer and Head of Global Policy & Operations. Former founding executive and vice chairman of the Diem Association (Meta's stablecoin project), he leads global regulatory strategy, public policy, market expansion, and international operations.
Key management risks are founder concentration and high post-IPO equity compensation (~$500+ million in 2025, including $424 million in IPO-related RSU acceleration), which is normalizing (Q3 and Q4 2025 equity comp was $59M and $48M, trending towards a sub-$200M annualized run rate).
White-Label & Platform-Native Stablecoins
The most underappreciated risk to USDC market share is platforms, major applications, and financial institutions launching their own branded stablecoins. For example, Hyperliquid has USDH, PayPal has PYUSD, Fidelity has FIDD, JPMorgan has JPMD. Recently, Polymarket launched "Polymarket USD," currently a USDC wrapper but potentially a stepping stone to independent settlement. If this strategy expands under the GENIUS Act framework, USDC could slowly lose its status as the default settlement rail. Our base case forecasts USDC market share declining from 24.8% to 22.5% by 2030 to reflect this fragmentation.
Mitigating Factors: White-label stablecoins still require reserve infrastructure, compliance, and—most importantly—deep liquidity. Given USDC's integration into every major exchange, wallet, DeFi protocol, and bridge, new branded stablecoins would need to replicate that liquidity network to function as independent settlement tokens. Deep liquidity pools, tight spreads, and instant redeemability are not easily bootstrapped; fragmented stablecoins with weak liquidity create worse execution for users. The switching costs to launch a fully independent reserve are high enough that most platforms may never complete the transition.
Federal Funds Rate Sensitivity
Reserve income is directly linked to interest rates. For the forecasted $284 billion average USDC in 2030, every 100 basis point rate cut equates to approximately $2.8 billion in lost total reserve revenue. If the Fed cuts rates to 2.0%, forecasted 2030 reserve income would be 25-30% lower than our base case. Kalshi prediction markets currently price a 63% probability of further rate cuts by 2027.
Mitigating Factors: Even at a 2.5% yield, $284 billion average USDC generates $7.1 billion in reserve income, still 2.7x the $2.64 billion earned in 2025 at a 4.19% yield. Supply growth overwhelms all but the most extreme rate scenarios.
Single-Product Concentration & Coinbase Dependence
USDC reserve income constituted over 96% of revenue in 2025. Coinbase controls ~67% of US crypto exchange share and receives 51% of reserve income. As noted, if Coinbase launches its own stablecoin, aggressively renegotiates terms, or if regulatory headwinds slow USDC supply growth, the entire revenue base is at risk.
Mitigant 1: Given Coinbase earns $1.35 billion annually from its arrangement with Circle with near-zero balance sheet risk, it seems unlikely they would choose to launch a competing stablecoin. If they did, it would require Coinbase to build the regulatory infrastructure and liquidity that Circle has spent years constructing.
Mitigant 2: The market criticism was levied similarly at Visa for years (calling it a single-product business), yet Visa's value-added services generated over $10.9 billion in 2025 (up 24% YoY), demonstrating its reduced reliance on interchange fees. We see CPN as Circle's key diversification lever. By the end of 2030, we forecast CPN will generate $350 million in transaction-based revenue (~4% of total revenue), which is both rate-insensitive and independent of the Coinbase relationship. Over time, institutional and B2B USDC origination that bypasses Coinbase should also organically lower the blended distribution cost.
Tether Resilience & Competitive Landscape
USDT's current supply is nearly 2.5x that of USDC, and Tether is actively closing the regulatory gap USDC leveraged. In January 2026, Tether launched USAT, a GENIUS Act-compliant stablecoin issued through Anchorage Digital Bank (OCC-regulated), giving Tether a path into the US institutional market previously locked out. If Tether successfully runs a dual strategy (USDT for global liquidity, USAT for US compliance), USDC's regulatory moat would narrow significantly.
Mitigating Factors: The competitive landscape is nuanced. USDT dominates CEX trading outside the US and remittances in emerging markets, while USDC dominates DeFi collateral (default choice for Aave, Compound, Uniswap), US institutional adoption, cross-chain bridging (CCTP handles 47-50% of bridging volume), and B2B payments ($235 billion in 2025, up 733% YoY, with USDC accounting for ~65%). These are effectively different products serving different TAMs. That said, our thesis is built on total stablecoin market expansion, not market share growth at Tether's expense. Both stablecoins will grow significantly.
Disclosure: This material is for informational purposes only and does not constitute investment advice, financial advice, trading advice, or any other form of advice. The views expressed are those of the author and should not be taken as advice to buy, sell, or hold any asset. The author or associated entities may hold positions in the assets discussed. You should conduct your own research and consult appropriate financial professionals before making any investment decisions.
