How Circle Makes Money From USDC—and Why Reserve Income Is Not Profit

Circle's second-quarter accounts show $701.315 million in revenue and reserve income converting to just $48.214 million in net income, revealing how the USDC stablecoin issuer's business model works and why reserve income alone doesn't equal profit. The gap between the two figures reflects distribution costs paid to exchanges and partners, operating expenses, and taxes that consume most of the gross reserve earnings generated on USDC's backing assets. The distinction matters for investors evaluating Circle's profitability, since the company's revenue is largely driven by interest rates on reserves backing USDC in circulation, making earnings sensitive to rate cuts rather than purely tied to stablecoin adoption. Watch next: how distribution costs evolve as competition among stablecoin issuers intensifies, and whether net income margins hold if interest rates decline.