On the Binance trading interface from four years ago, BUSD was placed in the most convenient spot, while USDC was merely a tolerated outsider. After the whole BUSD episode, Binance stepped away from the stablecoin issuance end, and that territory was ceded. Now this exchange has turned around and is paying money to become a shareholder of Circle—and it has also tied itself into a five-year promotional agreement. With roles reversed, whose pocket the money ultimately lands in is the balance sheet that should be clarified.
The terms are all laid out in the 8-K. Binance will subscribe to Circle’s Class A common shares at $80.84 per share for a total of roughly $100 million. The deal will be settled on September 17, and disclosed before trading on September 22. The stock cannot be sold, transferred, or hedged within two years. Voting rights remain with Binance. The commercial agreement runs for five years, replacing two older arrangements signed in November 2024 and August 2025, with a focus on emerging markets.
Circle doesn’t really lack this extra $100 million. This equity is more like a block of collateral welded between the interests of both sides: the two-year lock-in keeps Binance pinned in place and promotional fees keep getting collected, but the stock can’t be pushed out. What’s being exchanged for in this transaction is distribution rights—and distribution rights are the priciest cost item in Circle’s business.
The Q2 report lays out this cost structure. Almost all of Circle’s revenue comes from interest on reserve assets. The year-over-year growth in total revenue relative to reserve earnings is 7%. In the same quarter, distribution, trading, and other costs were $412 million, up only 1% year over year. Subtract those growth rates, and the portion the company keeps after distribution has a 15% year-over-year increase. With more partners, money paid out didn’t inflate in a linear way—there are signs that Circle has been able to claw back some pricing power in channel negotiations.
To judge whether this Binance deal is expensive, you first need to use the Coinbase deal as the benchmark. The profit-sharing terms set in 2023 were renewed as-is in August this year through 2029. Coinbase receives all of the yield on its own USDC reserve on its platform, and the remaining portion outside the platform is split in half. In 2024, Circle paid about $908 million for this. With the terms unchanged and the term even longer, Circle can’t move it in the short term.
Binance’s paid structure here is narrower. Circle pays incentive fees monthly. The billing base includes only the portion of USDC held through the Modular Smart Contract Wallet service—that is, the wallet infrastructure Circle provides itself. The other USDC that circulates within the platform doesn’t go into this pool. The downside Circle suffered under the prior agreement is written into this definition.
There’s another layer of accounting that’s easy to overlook. Under the Coinbase deal’s definitions, the USDC on Binance is considered “outside the platform,” and Coinbase still takes half of the remaining residual earnings. For every additional dollar of USDC Circle puts on Binance, it first pays Binance’s monthly fee, then splits the remaining amount with Coinbase, and only then does it eventually reach its own shareholders. Before the marginal profit from the new channel shows up on Circle’s books, it has to pass through two gates.
On the cost side, things are still relatively decent. The USDC circulation volume at quarter-end was $73.3 billion—still up year over year—but it dropped from the end of March, and the in-year peak wasn’t maintained. In the same period, the reserve yield fell by 66 basis points year over year. As unit yield declines and quarter-end balances shrink sequentially, growth in scale turns from a bonus into a necessity. What Binance needs to supply is precisely that gap. Its emerging-market customer base has a rigid demand for dollar accounts—it just previously couldn’t access them.
Market disagreement about this company is a bit exaggerated. On August 3, Morgan Stanley cut CRCL from Neutral to Underweight and slashed the target price to $38, arguing that tokenized cash products and new stablecoin models would likely squeeze its profitability over the long term. The first half of that case holds up: revenue is almost entirely tied to reserve interest, and when the interest-rate environment moves, the entire income statement moves with it. The second half, though, I disagree with. Treating channel expansion as profit leakage doesn’t match the trajectory suggested by the Q2 report. The $412 million figure is right there—it hasn’t risen proportionally with the number of partners. The stock’s later path has moved farther and farther away from that target price.
I’ll rank the three layers of value in this transaction. Equity financing comes last, and the five-year channel lockup sits in the middle. The top value is that Circle has turned a competitor it faced head-on in earlier days into a distribution partner it now binds with equity. A long-term variable hanging outside the balance sheet is pulled inside.
There’s only one condition for the arrangement to fail: the share of distribution, trading, and other costs as a portion of revenue. In the next two quarters, that ratio needs to rise again; meanwhile, if USDC circulation volume at quarter-end drops again quarter over quarter, then it’s essentially “buy scale with profit,” and all the statements above become moot.
The case for the bears is also defensible. Binance’s user base is primarily trading-focused: stablecoins in trading accounts turn over quickly and are thinly “deposited,” unlike the long-term balances at custody-style platforms, which are a different type of asset. Demand in emerging markets is real, but ticket size is low—by the time it’s allocated to reserve earnings, it only becomes evident over several quarters. The agreement is written for five years, but in practice it’s just an upper limit, and early termination clauses remain dangling.
On the market front, $CRCLB spot is quoted at $92.55, down 3.38% over the past 24 hours. The day after the news landed, the price moved back—this extra $100 million wasn’t treated by the market as a reason for revaluation. Binance’s cost basis at 80.84 is still in unrealized profit, and the two-year lockup keeps it temporarily sitting on the books.
What’s worth watching next isn’t the stock price. The on-chain balance structure of #USDC is publicly verifiable, and the line item for distribution costs in Circle’s Q3 report will be disclosed as usual. If you’re interested in this business, you can add these two items to your watchlist and check back on them once per quarter.
The terms are all laid out in the 8-K. Binance will subscribe to Circle’s Class A common shares at $80.84 per share for a total of roughly $100 million. The deal will be settled on September 17, and disclosed before trading on September 22. The stock cannot be sold, transferred, or hedged within two years. Voting rights remain with Binance. The commercial agreement runs for five years, replacing two older arrangements signed in November 2024 and August 2025, with a focus on emerging markets.
Circle doesn’t really lack this extra $100 million. This equity is more like a block of collateral welded between the interests of both sides: the two-year lock-in keeps Binance pinned in place and promotional fees keep getting collected, but the stock can’t be pushed out. What’s being exchanged for in this transaction is distribution rights—and distribution rights are the priciest cost item in Circle’s business.
The Q2 report lays out this cost structure. Almost all of Circle’s revenue comes from interest on reserve assets. The year-over-year growth in total revenue relative to reserve earnings is 7%. In the same quarter, distribution, trading, and other costs were $412 million, up only 1% year over year. Subtract those growth rates, and the portion the company keeps after distribution has a 15% year-over-year increase. With more partners, money paid out didn’t inflate in a linear way—there are signs that Circle has been able to claw back some pricing power in channel negotiations.
To judge whether this Binance deal is expensive, you first need to use the Coinbase deal as the benchmark. The profit-sharing terms set in 2023 were renewed as-is in August this year through 2029. Coinbase receives all of the yield on its own USDC reserve on its platform, and the remaining portion outside the platform is split in half. In 2024, Circle paid about $908 million for this. With the terms unchanged and the term even longer, Circle can’t move it in the short term.
Binance’s paid structure here is narrower. Circle pays incentive fees monthly. The billing base includes only the portion of USDC held through the Modular Smart Contract Wallet service—that is, the wallet infrastructure Circle provides itself. The other USDC that circulates within the platform doesn’t go into this pool. The downside Circle suffered under the prior agreement is written into this definition.
There’s another layer of accounting that’s easy to overlook. Under the Coinbase deal’s definitions, the USDC on Binance is considered “outside the platform,” and Coinbase still takes half of the remaining residual earnings. For every additional dollar of USDC Circle puts on Binance, it first pays Binance’s monthly fee, then splits the remaining amount with Coinbase, and only then does it eventually reach its own shareholders. Before the marginal profit from the new channel shows up on Circle’s books, it has to pass through two gates.
On the cost side, things are still relatively decent. The USDC circulation volume at quarter-end was $73.3 billion—still up year over year—but it dropped from the end of March, and the in-year peak wasn’t maintained. In the same period, the reserve yield fell by 66 basis points year over year. As unit yield declines and quarter-end balances shrink sequentially, growth in scale turns from a bonus into a necessity. What Binance needs to supply is precisely that gap. Its emerging-market customer base has a rigid demand for dollar accounts—it just previously couldn’t access them.
Market disagreement about this company is a bit exaggerated. On August 3, Morgan Stanley cut CRCL from Neutral to Underweight and slashed the target price to $38, arguing that tokenized cash products and new stablecoin models would likely squeeze its profitability over the long term. The first half of that case holds up: revenue is almost entirely tied to reserve interest, and when the interest-rate environment moves, the entire income statement moves with it. The second half, though, I disagree with. Treating channel expansion as profit leakage doesn’t match the trajectory suggested by the Q2 report. The $412 million figure is right there—it hasn’t risen proportionally with the number of partners. The stock’s later path has moved farther and farther away from that target price.
I’ll rank the three layers of value in this transaction. Equity financing comes last, and the five-year channel lockup sits in the middle. The top value is that Circle has turned a competitor it faced head-on in earlier days into a distribution partner it now binds with equity. A long-term variable hanging outside the balance sheet is pulled inside.
There’s only one condition for the arrangement to fail: the share of distribution, trading, and other costs as a portion of revenue. In the next two quarters, that ratio needs to rise again; meanwhile, if USDC circulation volume at quarter-end drops again quarter over quarter, then it’s essentially “buy scale with profit,” and all the statements above become moot.
The case for the bears is also defensible. Binance’s user base is primarily trading-focused: stablecoins in trading accounts turn over quickly and are thinly “deposited,” unlike the long-term balances at custody-style platforms, which are a different type of asset. Demand in emerging markets is real, but ticket size is low—by the time it’s allocated to reserve earnings, it only becomes evident over several quarters. The agreement is written for five years, but in practice it’s just an upper limit, and early termination clauses remain dangling.
On the market front, $CRCLB spot is quoted at $92.55, down 3.38% over the past 24 hours. The day after the news landed, the price moved back—this extra $100 million wasn’t treated by the market as a reason for revaluation. Binance’s cost basis at 80.84 is still in unrealized profit, and the two-year lockup keeps it temporarily sitting on the books.
What’s worth watching next isn’t the stock price. The on-chain balance structure of #USDC is publicly verifiable, and the line item for distribution costs in Circle’s Q3 report will be disclosed as usual. If you’re interested in this business, you can add these two items to your watchlist and check back on them once per quarter.