Equity Research

Americas Payments, Processors & IT Services

30 June 2025

Circle Internet Group Inc.

Stablecoin Summer: Initiating

Coverage of CRCL With an OW
Rating and $215 PT CRCL OVERWEIGHT
from Not Rated
We initiate coverage of CRCL with an OW rating and $215 Americas Payments,
POSITIVE
Processors & IT Services
PT. As blockchain technology is integrated into the traditional Unchanged

financial ecosystem, we view CRCL as one of the only ways for Price Target USD 215.00
from N/A
public company investors to play the theme. A steady Price (27-Jun-25) USD 180.43
drumbeat of stablecoin-related news should send shares Potential Upside/Downside +19.2%
Source: Bloomberg, Barclays Research
higher.
Market Cap (USD mn) 40152
The key takeaway: We are initiating coverage on Circle Internet Group (CRCL) with an OW Shares Outstanding (mn) 222.54
rating and a PT of $215. CRCL operates one of the largest stablecoin networks in the world, Free Float (%) 25.12
anchored around USDC, the company’s 1:1 reserve-backed USD denominated payment 52 Wk Avg Daily Volume (mn) N/A
stablecoin. While most of the current use cases are siloed within the “crypto verse” we believe Dividend Yield (%) N/A
stablecoins, and more importantly USDC, are reaching an inflection point and will soon exit the Return on Equity TTM (%) N/A
crypto economy to become a more important aspect of the traditional financial ecosystem. We Current BVPS (USD) N/A
believe CRCL is well positioned to be the stablecoin issuer of choice, given its regulatory-first Source: Bloomberg

mindset, network scale, marquee customer base, and innovative approach to solving for
inefficiencies across the crypto/traditional financial ecosystems. Price Performance Exchange-NYSE
52 Week range USD 298.99-64.00
Why we like CRCL: 1) We see an extensive TAM for stablecoins evolving; 2) the company has a
first-mover advantage from a regulatory standpoint; 3) the network effects drive a flywheel for
growth; 4) the business is already profitable with solid scale; 5) marquee client base of blue-chip
institutions.

Key risks and considerations: 1) The business today is rate-sensitive, with other revenue
streams still quite nascent; 2) the regulatory landscape for cryptocurrency is still evolving; 3) the
competitive landscape includes larger-competitor Tether, as well as a slew of new entrants Source: IDC
Link to Barclays Live for interactive charting
including, soon we believe, banks; 4) concentration risk from partners such as COIN and
Binance; and 5) exposure to hypothetical liquidity and counter-party risk.
Americas Payments, Processors & IT
Valuation: Our $215 PT is based on 57x P/S + DCF. See Valuation & Comps for more details. Services
Ramsey El-Assal
+1 212 526 7144
[Link]-assal@[Link]
BCI, US

Ryan Campbell
+1 212 526 8508
ryan.campbell1@[Link]
Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies BCI, US
covered in its research reports. As a result, investors should be aware that the firm may have a
Allison Gelman
conflict of interest that could affect the objectivity of this report. Investors should consider this
+1 212 526 3367
report as only a single factor in making their investment decision.
[Link]@[Link]
Please see analyst certifications and important disclosures beginning on page 26. BCI, US
Completed: 27-Jun-25, 22:42 GMT Released: 30-Jun-25, 04:10 GMT Restricted - External
Barclays | Circle Internet Group Inc.

CRCL: Quarterly and Annual EPS (USD)

2024 2025 2026 Change y/y

FY Dec Actual Old New Cons Old New Cons 2025 2026
Q1 0.00A N/A 0.25A N/A N/A 0.11E N/A N/A -56%
Q2 0.00A N/A -1.26E N/A N/A 0.11E N/A N/A 109%
Q3 0.00A N/A 0.06E N/A N/A 0.15E N/A N/A 150%
Q4 0.00A N/A 0.04E N/A N/A 0.20E N/A N/A 400%
Year 0.30A N/A -0.90E 1.47E N/A 0.57E 2.40E N/A 163%
P/E N/A N/A N/A
Consensus numbers are from Bloomberg received on 27-Jun-2025; 12:50 GMT
Source: Barclays Research

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Barclays | Circle Internet Group Inc.

Americas Payments, Processors & IT Services POSITIVE

Circle Internet Group Inc. (CRCL) OVERWEIGHT

Income statement ($mn) 2024A 2025E 2026E 2027E CAGR Price (27-Jun-2025) USD 180.43
Revenue 659 887 995 1,374 27.8% Price Target USD 215.00
EBITDA (adj) 285 420 486 797 40.9% Why OVERWEIGHT?
EBIT (adj) 234 338 365 696 43.8% CRCL operates one of the largest
Pre-tax income (adj) 222 -190 243 569 36.9% stablecoin networks in the world,
Net income (adj) 156 -235 150 412 38.3% anchored by USDC. As stablecoins
EPS (adj) ($) 0.30 -0.90 0.57 1.58 73.5% exit the crypto-sphere and enter
Diluted shares (mn) 261 261 261 261 0.0% traditional finance, CRCL is well
DPS ($) 0.00 0.00 0.00 0.00 N/A positioned to capture share and
grow ahead of peers. The
Margin and return data 2024A 2025E 2026E 2027E Average
company’s institutional client base
EBITDA (adj) margin (%) 43.2 47.4 48.8 58.0 49.4
speaks to the quality of products/
EBIT (adj) margin (%) 35.5 38.1 36.7 50.7 40.2
service levels, which in turn drive
Pre-tax (adj) margin (%) 33.6 -21.4 24.4 41.4 19.5 industry-leading margins.
Net (adj) margin (%) 23.6 -26.5 15.1 30.0 10.5
ROA (%) N/A N/A N/A N/A N/A Upside case USD 256.00
ROE (%) N/A N/A N/A N/A N/A Our upside price target assumes the
company grows USDC in circulation
Balance sheet and cash flow ($mn) 2024A 2025E 2026E 2027E CAGR
above our estimates with stablecoin
Tangible fixed assets 19 26 32 45 33.6% use cases exiting the crypto-realm
Intangible fixed assets 331 501 640 910 40.0% and taking share in traditional
Cash and equivalents 751 922 1,111 1,486 25.6% financial flows. Adjusted EBITDA
Total assets 45,834 61,681 76,741 107,527 32.9% margins continue to expand and the
Short and long-term debt 41 37 37 37 -2.8% company signs new distribution
Other long-term liabilities 21 27 34 47 30.5% partners.
Total liabilities 44,124 59,815 74,712 105,123 33.6%
Downside case USD 124.00
Net debt/(funds) -714 -885 -1,073 -1,486 N/A
Our downside price target assumes
Shareholders' equity 45,834 61,681 76,741 107,527 32.9%
the company is unable to grow
Change in working capital N/A N/A N/A N/A N/A
USDC beyond historical growth
Cash flow from operations 345 -93 344 686 25.8% rates and USDC use-cases remain
Capital expenditure -61 -103 -121 -168 N/A siloed to the crypto ecosystem.
Free cash flow 283 -197 223 518 22.3% Distribution partners take more
Valuation and leverage metrics 2024A 2025E 2026E 2027E Average economics or move elsewhere as
P/E (adj) (x) N/A N/A N/A N/A N/A stablecoin legislation unlocks a
EV/EBITDA (adj) (x) 364.6 247.2 213.7 130.4 239.0 wave of new competition.

P/Sales (x) 71.6 53.2 47.4 34.3 51.6 Upside/Downside scenarios

Dividend yield (%) 0.0 0.0 0.0 0.0 0.0
Total debt/capital (%) N/A N/A N/A N/A N/A
Net debt/EBITDA (adj) (x) -2.5 -2.1 -2.2 -1.9 -2.2

Note: FY End Dec

Source: Company data, Bloomberg, Barclays Research

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Barclays | Circle Internet Group Inc.

Investment Highlights
Public equity investors are hungry for a scaled, blockchain-native stock. This makes CRCL
a scarce asset. We believe CRCL has significant scarcity value. Over many years we see an
increasing number of investors who hold a positive view of crypto and blockchain technology
who have come to believe—as we have—that they are transformative in nature, at least in terms
of reimagining global financial “plumbing”. At the same time, however, there are very few ways
to invest in this theme in the public equity markets.

In many ways CRCL is the first scaled blockchain-native digital infrastructure play available to
investors. Crypto miners certainly represent crypto “infrastructure”, but the businesses are
industrial and capital-intensive in nature. They play an essential role securing the Bitcoin
network protocol but are themselves not reliant operationally on blockchain technology.
Likewise, centralized brokerages such as COIN represent critical on-ramps into the ecosystem,
but—as with miners—do not themselves depend on blockchain technology to operate. Lastly,
investment vehicles such as MSTR provide investors exposure to the sector indirectly through
bitcoin asset ownership, but do not exemplify blockchain’s secular possibilities. This is to say
that there is significant investor appetite for a blockchain-native infrastructure play: CRCL is
currently the only stock that checks this box.

CRCL should continue to enjoy headline momentum. Despite CRCL’s meteoric re-rating since
the IPO, we see a steady future drumbeat of positive headlines driving further gains. For
example, we expect new stablecoin issuance from the largest financial services, retailer, and
consumer brands. Likewise, we see eventual passage of US stablecoin legislation providing
many weeks of positive headlines as contrasting Senate and House bills are reconciled.

Stablecoins appear to be nearing a pivotal turning point, exiting the crypto realm and
entering traditional finance, where an extensive TAM awaits. While the majority of
stablecoin usage is currently within the crypto-verse, we believe the real—and quite vast—
opportunity for CRCL is entering the traditional financial ecosystem. Today, the process of
moving money across legacy financial infrastructure comes with friction and inefficiencies,
whether it be high fees, lengthy transfer times, a lack of transparency, the number of players
involved, or general barriers to access. We believe stablecoins represent a better mouse trap
poised to provide a more seamless, efficient way to move digital money at scale.

While it remains early days in the stablecoin industry, the technology has already gained some
momentum. As of the end of 2024, the total supply of stablecoins in circulation was ~$203B
or ~0.17% of global fiat M2 money supply. According to [Link], the total supply is expected to
grow at a ~38% CAGR and reach ~$1.4T by 2030, which would make up ~0.9% of M2 (Figure 1).

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Barclays | Circle Internet Group Inc.

FIGURE 1. Stablecoin Supply vs. Fiat Global M2

1600 1.00%
1409

0.80%
1200 38% CAGR

0.60%
800
0.40%

400 203
0.20%

0 0.00%
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Stablecoin Supply Stablecoins as a % of Gobal M2 Supply

M2 is a measure of the US money stock that includes M1 (currency and coins held by the non-bank public, checkable deposits, and travelers’ checks) plus savings deposits
(including money market deposit accounts), small time deposits under $100K, and shares in retail money market mutual funds.
Source: RWA, Barclays Research

While we certainly do not expect stablecoins to replace fiat currency, we view them as a critical
enabler of blockchain-based financial technology, which is likely to grow in importance in the
years ahead, we believe. Within our Industry Overview below, we lay out a variety of crypto-use
cases for stablecoins; however, we will be focusing on traditional finance use cases as the key
driver of stablecoin, and more importantly USDC, adoption over time. We view the highest
potential mainstream use cases for USDC as payments settlement, asset trading/settlement,
cross-border payments/remittance, and treasury/liquidity with capital markets activity and
real-world asset tokenization further down the line. According to McKinsey and S&P Global,
consumer payments, cross-border payments, and capital markets generate ~$1.2T, ~$288B, and
~$180B in annual revenue, respectively. Additionally, Bain & Company projects that asset
tokenization may provide an additional ~$400B annual revenue opportunity in distributing
alternative investments to individuals.

At the same time, we view the retail payments use case in developed markets as less compelling
and somewhat of a solution looking for a problem. In the mind of the consumer, digital and
card-based payments (and even remittances) appear to be real time in nature—despite funds
actually settling between parties in the value chain at T+1 or longer. Our view is that instead of
attempting to construct a new two-sided global payments network from scratch, the path of
least resistance will more likely be to integrate stablecoin settlement into existing scaled
networks such as V and MA.

At the same time, we acknowledge the substantial utility that stablecoins offer to consumers in
emerging markets, where local currencies are often burdened by high inflation and volatility,
eroding purchasing power and trust in domestic financial systems. With stablecoins, a user in
Argentina, Nigeria, or Venezuela can use a local exchange or crypto wallet to exchange local fiat
currency for digital US dollars, preserving wealth and protecting against local currency
inflation. In this context, there are ~2B people in countries with significant currency devaluation
(using Census data on countries with >10% currency devaluation), and we believe 50-60% of
total stablecoins in circulation are held by consumers seeking an inflation hedge.

If we take a step back and look at global cross-border payment flows, there is a significant
opportunity for stablecoins. In Figure 2 and 3 below, we break out Retail and Wholesale total

30 June 2025 5
Barclays | Circle Internet Group Inc.

addressable markets for cross-border flows. Retail cross-border payment flows consist of four
key segments, including 1) business-to-business (B2B), which includes trade-related payments
and international transfers from multinational corporations; 2) consumer-to-business (C2B),
which consists of e-Comm and tourism; 3) consumer-to-consumer (C2C), which includes
remittance flows; and 4) business-to-consumer (B2C), which consists of payroll and
marketplace payments. Wholesale is made up of high-value transactions between commercial
banks, typically related to FX. As mentioned above, while we do not expect stablecoins to
completely replace fiat money movement, we see many potential use cases. Taking just ~1% of
share from Retail Market flows would be ~$440B and in Wholesale, even larger at ~$1.46T.

FIGURE 2. Retail Cross-Border Payment Flows (2023) FIGURE 3. Wholesale Payment Flows (2023)

C2B, $3.1
Gov & Central
C2C, $1.8 Hedgefunds & Banks , $2.3
Proprietary Trading
B2B, SMB , $10.4 B2C, $1.7 Firms , $25.8

B2B, E-commerce, Other Banks &

$10.0 Investors, $91.2
Institutional
Investors, $26.3

B2B, Large
Enterprises, $17.2

Source: FXC Intelligence, Barclays Research. (Source updated 7/1/25) Source: FXC Intelligence, Barclays Research. (Source updated 7/1/25)

CRCL’s management team puts compliance first, giving the company a first-mover
advantage from a regulatory standpoint. In our view, CRCL has prioritized compliance with
three key focuses: stability, risk management, and transparency. For a stablecoin to be “stable”
is that it holds a peg to an underlying currency or asset. It is crucial to maintain, as with a de-
pegging, the stablecoin will likely face a bank run as users rush to redeem coins. We saw this
occur in 2023 with Terra Luna, though, we note, that was an algorithmic stablecoin. In CRCL’s
case, USDC is a 1:1 USD-backed stablecoin, with ~90% of reserve assets held in the Circle
Reserve Fund (more on this in Appendix A), which is managed by BlackRock, with reserves held
in the custody of The Bank of New York Mellon. These reserves are composed solely of low-risk
and readily liquid assets—such as short-term U.S. Treasuries. The remaining ~10% is held in
cash at Global Systematically Important Banks (GSIBs), which face heightened capital/liquidity
requirements and regulatory supervision. While USDC is not immune to a bank run, or potential
contagion from other stablecoins de-pegging, we believe it is less likely, given USDC’s
underlying reserves.

We view CRCL’s broader risk-management strategy as a key differentiator. Currently, the

company’s largest operating expense is payroll, and while the business is not particularly
capital or headcount intensive, we note that ~20% of employees are risk and control specialists.
CRCL has a robust onboarding process to ensure compliance with KYC/AML, monitoring/
reporting, and sanctions. Similarly, the company recently completed a System and Organization
Controls (SOC) type-2 audit through the American Institute of Certified Public Accountants
(AICPA), which measures the effectiveness of controls regarding data security/privacy over time.
While US stablecoin regulation is still being “ironed-out”, in 2024, Circle became the first major
stablecoin issuer deemed to be in compliance with Europe’s Markets in Crypto-Asset (MiCA)
regulations.

Lastly, CRCL has remained transparent in its reporting, which includes daily updates to the
composition of the Circle Reserve Fund (via BlackRock), weekly reports on reserve assets,

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Barclays | Circle Internet Group Inc.

minting, and redemption (via Circle), monthly third-party assurance over the value and
composition of these assets (via Deloitte), and an annual full circle audit (via Deloitte).

CRCL’s innovative ecosystem approach has begun to garner network effects. We believe
CRCL has taken a calculated approach to building its stablecoin network, starting with USDC as
the keystone, forging key distribution partnerships, building out value-added services like CPN
and CCTP to improve transactability, and providing open APIs for developers to build their own
products with the technology. In our view, this multi-faceted strategy has helped to create a
self-reinforcing flywheel for USDC.

Since the beginning, USDC has been used as an on-ramp into the crypto ecosystem, enabling
users to buy/sell digital assets or partake in DeFi activities. This primary function, with a little
help from ancillary products or offerings, has pushed USDC supply past ~$60B. We expect DeFi
to remain a key driver of USDC in circulation, with various exchanges, wallets, and DeFi
protocols integrating the technology. Additionally, we believe Web3 developers will be another
additive force to the ecosystem. As more applications, platforms, services, and marketplaces
that support USDC are built, more users/usage will likely follow.

At the same time, as USDC exits the crypto economy, we anticipate that a similar strategy will
facilitate adoption. Namely, where key partnerships, API libraries, and products such as CPN
drive adoption among traditional financial institutions.

For example, while CPN only launched a few weeks ago, the service is designed to support a
broad spectrum of money movement use cases for businesses, consumers, and institutions—
including remittances, supplier or retail payments, payroll, capital markets settlement, FX,
treasury, and onchain finance. As these use-cases begin to scale, more USDC liquidity will be
injected into markets, further enhancing usability.

CRCL is already profitable at scale, despite the stablecoin industry being at an early stage
of development. CRCL’s scale has enabled the company to achieve substantial profitability.
While there are a variety of players issuing stablecoins—and more to come if the GENIUS/
STABLE Act passes in Congress—the landscape today is primarily a two-horse race between
Circle and Tether. As of 1Q25, Circle’s USDC had a market cap of ~$60B compared to Tether’s
USDT at ~$144B, pegging the two at ~28.4% and ~68.2% of market share, respectively (as seen
in Figure 4 below).

FIGURE 4. Stablecoin Market Share (1Q24-1Q25)

$211
$187 $7
$200
Stablecoins in Circulation ($B)

$162 $7
$150 $155
$7
$150 $7 $7
$144
$137
$100 $120
$111 $114

$50
$60
$33 $33 $35 $44
$0
1Q24 2Q24 3Q24 4Q24 1Q25

USDC USDT Other

Source: Company Filings, Barclays Research

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Barclays | Circle Internet Group Inc.

On expenses, distribution and transactions costs made up ~60% of gross revenue in 1Q25, and
we expect that to move up closer to ~65% by year-end and remain at those levels in FY26 and
FY27. Additionally, the largest component of operating expenses is compensation, which was
~33% of 1Q25 net revenue. However, we believe this will increase to ~55% at year-end, before
coming back down to ~46% in FY26 and ~38% in FY27. CRCL’s remaining operating expenses, by
size, include G&A, D&A, IT Infrastructure, and Marketing. While we expect to see CRCL sign more
partnerships, which may increase distribution and transaction costs, the overall business is not
capital intensive, with most of the operating expense driven by headcount.

In FY24, adj. EBITDA was $285M, with a margin of ~43.2%. We expect this to improve further to
~$420M in FY25, ~$486M in FY26, and ~$797M in FY27, with corresponding margins of ~47%,
~49%, and 58%, respectively (as seen in Figure 5 below). While CRCL’s adj. EBITDA includes add-
backs for SBC and Other, we note the company reported positive net income of $156M in FY24.
We expect CRCL’s net income to come down to ($235M) in FY25, primarily driven by an IPO-
related SBC expense, before returning to ~$150M in FY26 and ~$412M in FY27.

FIGURE 5. CRCL EBITDA and Margin

$900 70%
58%
$800 55% 60%
$700 49%
Adjusted EBITDA ($M)

43% 47% $797 50%

$600
$500 40%
$400 21% $486 30%
$395 $420
$300
20%
$200 $285
$100 10%

$0 $96 0%
2022 2023 2024 2025E 2026E 2027E

FY Margin (%)

Source: Company Filings, Barclays Research estimates

CRCL has an impressive institutional client base: We believe one of the key differentiators
between CRCL and Tether is each company’s initial target customer base. While Tether is larger,
we believe the company has a more consumer-oriented strategy and fewer traditional/
mainstream financial services partners. In Figure 6 below we lay out some of CRCL's key
relationships and partnerships.

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Barclays | Circle Internet Group Inc.

FIGURE 6. CRCL Possesses a Broad Client Base

Company Use-Cases

MA partners with Circle for USDC settlement on the MA network, USDC settlement for acquirers, in order to payout
Mastercard
merchants in USDC, and a MA-linked card to enable USDC spending.

COIN partners with CRCL to distribute USDC across its global cryptocurrency exchange. The Coinbase protocol Base, an
Coinbase
Ethereum Layer 2 blockchain, enables low cost, high speed USDC transactions.

Partnering with CRCL to jointly explore and develop stablecoin-enbaled solutions, like FIUSD, for financial institutions and
Fiserv
merchants

Stripe Stripe began offering USDC as a payout option in 2022, and, as of 2024, enables merchant stablecoin acceptance.

Nubank and Circle work together to create digital asset products, enabling near-instant, low-cost, 24/7 access to USDC for
Nubank
Nubank users. Nubank customers can transfer USDC to other wallets.

Worldpay was the first global merchant acquirer to offer direct USDC settlement. Worldpay offers streamlined treasury
Worldpay
management with USDC settlement, as well as card-to-crypto and crypto-to-card enablement for major exchanges.

leverages Circle’s USDC to facilitate money-movement, with cash-out capabilities in 180 countries and on-ramp into USDC
MoneyGram
in +30 countries. Also, MoneyGram’s Wallet product uses USDC to expedite P2P remittances.

In partnership with Circle, Standard Chartered holds a portion of the cash that backs the USDC reserve and facilitates
Standard Chartered and
local USDC minting in Singapore. The company’s minting capabilities allows for Zodia Markets to mint and burn USDC
Zodia Markets
near-instantly.

Lemon Lemon's exchange platform supports movement between local currencies and crypto (e.g., USDC) in Latin America.

Bullish Lists +50 USDC trading pairs on spot/derivatives markets on its global cryptocurrency exchange.

Settles all trades with USDC across its decentralized trading platform. dYdX utilizes Circle’s Cross-Chain Transfer Protocol
dYdX
(CCTP), allowing users to connect their wallets and deposit USDC.

Chipper Uses USDC for treasury management to reduce the costs and streamline cross-border settlement.

UN Refugee Agency Uses USDC and blockchain technology to make aid more easily accessible and transparent

Goodwall Connects students and young professionals via an online platform, which uses USDC for payout to beneficiaries

Uses USDC to offer blockchain-based insurance policies to underserved markets, allowing policyholders to receive claim
Ensuro
payments in minutes.

Source: Company Filings, Barclays Research

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Barclays | Circle Internet Group Inc.

Key Risks & Considerations

CRCL’s current revenue model is sensitive to interest rates: The majority of CRCL’s revenue
today (~99%) comes from reserve income, which is driven by the total number of USDC in
circulation multiplied by a reserve return ratio. In other words, CRCL reserve income will benefit
in a higher interest rate environment and face headwinds in a lower rate environment.

That said, the number of USDC in circulation has the potential to act as a natural hedge,
meaning that growth in coins in circulation offsets the impact of lower rates. Our belief is that
the secular adoption curve of stablecoins should help shield reserve income, even in a
moderately lower rate environment. However, in a scenario where rates decline and USDC in
circulation either remains flat or sees a net outflow, CRCL’s reserve income will come under
pressure. It is worth noting that in the recent past, the only time USDC has seen a consistent net
outflow was at the end of FY22 and in FY23 corresponding with the Terra Luna fiasco and the
subsequent Silicon Valley Bank failure, the latter of which was a holder of ~$3.3BB in CRCL
reserves (8% of total reserves), leading to a bank run and mass redemption of USDC for dollars
(more on this below). In 4Q22, USDC in circulation went from ~$53B to ~$44B and continued
downwards to ~$39B in 1Q23, ~$28B in 2Q23, ~$26B in 3Q24, and ~$25B in 4Q23, before
returning to growth in FY24. However, interest rates were rising at the time, limiting P&L
downside impact from USDC outflows.

Looking ahead, we expect interest rates to come down to ~4% in FY25 and to ~3.4% in FY26 and
FY27. At the same time, we believe USDC in circulation will continue to increase to ~$61B in
FY25, ~$83B in FY26, and ~$114B in FY27. We view rate sensitivity as one of the most important
items to monitor for CRCL, especially given the exogenous factor of interest rates. Over time, we
expect Other Revenue to help diversify the business; however, the products that drive Other are
in very early stages of adoption, and it will likely take time before they reach scale and
contribute to the overall business.

U.S. crypto regulation remains a work in progress—and will bring new competition. While
we view USDC as the most regulatory compliant stablecoin on the market today, the regulatory
landscape for stablecoins and the broader crypto economy remains in flux. Currently, in the U.S.
there are two stablecoin-focused bills in Congress: 1) the GENIUS Act in the Senate; and 2) the
STABLE Act in the House of Representatives. While these two pieces of legislation are similar,
there are a few differences that will need to be reconciled before a single bill can be forwarded
to President Trump for his signature. In our Industry Overview below, we have a more detailed
breakdown of the two bills.

That being said, the key risk for CRCL is that the legislation opens the door for other stablecoin
issuers, whether that be financial institutions (i.e., banks/credit unions), financial technology
companies (e.g., PYPL, FI, Stripe), or consumer facing merchants/marketplaces (e.g., Amazon
and Walmart). Similarly, while CRCL’s biggest competitor, Tether, is not currently compliant with
the regulatory framework discussed in both bills, it does not mean Tether cannot become
compliant with U.S. regulation.

Besides increased competition, there is a risk that future regulation will be fragmented from a
global perspective. One example would be the location of reserves. If one country requires a
specific percentage of reserves to be held in one country versus another, a stablecoin issuer
would potentially need to manage separate reserve pools, increasing operational costs. In
general inconsistent global regulations could potentially fragment liquidity, increase
transaction costs, and reduce stablecoin utility. Lastly, tax/reporting rules may be subject to
change, increasing compliance costs.

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Barclays | Circle Internet Group Inc.

Yield-bearing offerings are another topic of concern. Currently, proposed U.S. regulation does
not allow stablecoins yields to be paid back to users (CRCL has a yield-bearing product—USYC—
but it is not currently being offered in the US).

The competitive landscape includes Tether, as well as a slew of potential new entrants. As
mentioned above, the stablecoin market is primarily dominated by two players, Tether and
CRCL. However, we anticipate many new entrants to emerge—especially following passage of
US stablecoin legislation. These new issuers are likely to include: financial institutions, fintech
companies, merchants, and brands. Tor example, J.P. Morgan recently announced the pilot of
JPMD, a permissioned USD deposit token on Base (COIN's Ethereum-based Layer 2 Blockchain),
enabling institutional clients to securely send and receive money onchain. While JPMD is a
deposit token and not a stablecoin, it is most likely backed by actual commercial bank deposits,
which could be an early play on asset tokenization, rather than directly competing with USDC.
Likewise, in February, Stripe acquired Bridge, a stablecoin platform that issues a coin called
USDB. Additionally, Stripe announced Stablecoin Financial Accounts, allowing businesses to
hold balances in stablecoins, receive payments via both crypto and traditional fiat rails, and
send stablecoins to most markets globally. However, we note the accounts support both USDC
and USDB, with plans to add more stablecoins over time. Having said this, it is noteworthy that
two large fintechs—PayPal (PYUSD) and Fiserv (FIUSD)—have opted instead to white label
stablecoins from issuers such as CRCL and Paxos. In fact, FI announced an expanded
partnership with PYPL to increase interoperability between FIUSD and PYUSD. In our view the FI
token may have more utility on the financial services/banking side of FI’s business (i.e., FIUSD
could come to be used by small banks for liquidity, settlement, enterprise funds transfer, and
deposits, etc.).

Recent media reports also indicate that large enterprise merchants, namely AMZN, WMT, EXPE,
and “airlines” are looking into issuing proprietary stablecoins. We are skeptical of a merchant-
based offering, as several previous attempts to create lower-cost US payment networks
designed solely to reduce merchant acceptance fees (rather than drive consumer adoption)
have failed to gain traction. That being said, a merchant token that that comes with brand-
specific rewards and promotions—funded by reserve yields—could resonate with some
consumers in the same way that a private label credit card does.

We definitely expect large financial institutions to become more involved in stablecoin issuance.
As noted above, JPM recently announced the launch of JPMD, a deposit token, designed to
serve as a digital representation of commercial bank money. While we do not anticipate a
strategy where deposit tokens could be utilized for transactions and payment outside of JPM’s
ecosystem (i.e., as this would cannibalize debit card interchange), the concept may help the
bank defend its share of deposits from stablecoin threats.

Separately, Central Bank Digital Currencies or CBDCs could conceivably present their own
challenge, as they would constitute a native digital version of fiat currency issued and backed
by central banks, making them legal tender. This could, hypothetically, represent a competitive
threat to USDC and other fiat-pegged stablecoins. Fortunately for USDC and the stablecoin
industry in general, CBDCs are a concept whose appeal seems to be waning. For example, USDC
issuance by the US government appears be a politically unpalatable proposition that has largely
“died on the vine”.

CRCL’s model includes significant partnership concentrations. At this moment, CRCL has
inked three key partnerships we believe are worth noting, including Coinbase, Binance, and
BlackRock.

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Coinbase: In 1Q25, COIN received ~54% of gross reserve income, and while we believe this will
decline slowly over time, COIN will likely remain a key component to USDCs future growth. We
believe a key risk factor includes future contract renewals and renegotiations.

In August 2023, CRCL and COIN signed a three-year Collaboration Agreement which incentivizes
both parties to work together to grow the CRCL stablecoin network, while also giving CRCL sole
governance over it. Under the agreement, COIN will allow customers to buy and sell USDC on its
platform in exchange for fiat, support USDC for use by customers on a number of blockchains,
protocols, products & services, and actively contribute to policy/regulatory activities
encouraging adoption of USDC.

CRCL makes payments to COIN in return for its distribution efforts. These payments are
determined by the daily income generated from the reserves backing USDC, less management
fees (i.e., asset management/custody fees) and certain other expenses. The remaining income is
known as the payment base, which is paid out to all ecosystem players in three different ways.

• Issuer Retention: CRCL receives a portion of the payments base for compensation related to
its role as the stablecoin issuer. This amount is described in company filings as "ranging from
an annualized low-double-digit basis point to high tenth of a basis point" based on the
amount of USDC in circulation each day.

• Revenue Share: CRCL and COIN will then each receive an equal share of the remaining
payment base multiplied by the percentage of USDC held on each platform (i.e., custodial
products or managed wallet services) at the end of each day. As a hypothetical example: if
COIN holds on its own platform 20% of USDC in circulation, it would receive 20% of this
remaining share, etc. The same would apply for CRCL.

• Residual: After deducting the Issuer Retention and Revenue Share, there is a deduction for
other "ecosystem partners" (i.e., for coins held on other platforms). Then, after the payout of
ecosystem partners, CRCL and COIN split 50/50 any of the payment base that remains.

In November 2024, CRCL and COIN added an amendment for third-party ecosystem inclusion
(i.e., other distribution partners such as Binance), where the two will agree on the revenue share
percentages and requirements.

Separately, CRCL’s contractual relationship with COIN runs much deeper than just an economic
relationship. For example, if CRCL fails to meet its contractual obligations, upon expiration of
the existing contract, COIN may elect to terminate the agreement. Also, if COIN fails to meet
product/reseller targets, and there is no mutual agreement on renewal, CRCL may elect to cease
paying certain product/ecosystem fees. This protection would come in handy, for example, if
COIN hypothetically stopped actively supporting USDC, and instead began pushing a different
stablecoin.

CRCL also entered a perpetual intellectual property license agreement with COIN, under which
CRCL granted COIN a worldwide, non-exclusive, non-transferable, non-sublicensable, royalty-
free right to use trademarks related to current/future CRCL stablecoins, including USDC and
EURC, in connection with activities such as advertising, promotion, marketing, and
distribution. These agreements include provisions requiring CRCL to assign certain IP to COIN in
the case of specific events, including: 1) if payment provisions with respect to USDC violate an
applicable law or government order; 2) if an order from a court or jurisdiction prohibits CRCL
from continuing to satisfy payment obligations to COIN; or 3) if CRCL has not resumed payment
obligations post restructuring.

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Binance: While we do not have Binance's percentage of gross reserve income, the company
provides a Proof-of-Reserves (PoF), indicating that Binance has ~$5.6B of USDC customer net
balances on the platform, which are ~153% over-collateralized (i.e., a total ~$8.6B USDC sits on
the platform). In November 2024, CRCL entered an arrangement with Binance to further the
distribution of USDC. According to the agreement, Binance will market and promote USDC on
its platform (2-year term or, if the contract is terminated early, 1-year tail with lower fees) and
maintain a portion of its treasury in USDC (2-year term). CRCL paid Binance an aggregate
upfront, one-time fee of $60.25M, as well as agreeing to pay a monthly incentive fee (percentage
of USDC held on its platform and in its treasury—ranging from an annualized mid-double-digit
to high double-digit percentage of a fixed rate, reset quarterly based on a discount to the three-
month SOFR, based on balances held). However, such incentive fees are payable only if Binance
continues to hold at least $1.5B of USDC in treasury (although Binance agreed to keep ~$3B of
USDC in its treasury).

BlackRock: In March 2025, CRCL entered a 4-year memorandum of understanding (MOU) with
BLK, under which CRCL agreed to treat BLK as the company’s preferred partner for managing
stablecoin reserves and agreed to prioritize holding reserves for the issuance of CRCL
stablecoins and other products with BLK. More specifically, CRCL committed to maintaining at
least 90% of U.S.-managed fiat reserves for USDC (ex-bank deposits) with BLK. Additionally, BLK
agreed to prioritize USDC and other CRCL stablecoins for all U.S. dollar payment stablecoin-
related use cases and committed not to develop and launch a competitive payment stablecoin.

CRCL remains exposed to a bank run and counter-party risk. While we remain impressed
with CRCL’s reserve transparency and risk management approach, recent history shows that
counterparty risk—as well as “sentiment contagion” from unrelated crypto controversies—can
increase the risk of bank-style runs and potential de-pegging. That being said, in CRCL's short
history, there has only been one reported time frame (3Q22-4Q23) where USDC saw a consistent
net outflow. In our view, there were a combination of sequential factors that drove these net
outflows, namely: Terra Luna's de-pegging, FTX's bankruptcy, and the collapse of Silicon Valley
Bank.

Terra Luna was a blockchain ecosystem that utilized two crypto currencies: TerraUSD (UST), an
algorithmic stablecoin intended to maintain a $1 peg, and Luna, a governance and staking
token used to stabilize UST's peg through a mint-and-burn mechanism. However, in May of
2022, large sell-offs of UST began, driven by various coordinated market movements and
volatility. Soon the peg broke, dropping UST to a few cents, which resulted in Luna's
hyperinflation (i.e., due to Luna's minting mechanism), plummeting the price to near zero, and
wiping out ~$40B in market value.

Soon after, in November of 2022, FTX, a major crypto exchange, was discovered to have misused
customer money to fund closely its subsidiary trading firm Alameda Research's risky
investments. When it was revealed that Alameda held a large amount of FTX's native crypto
currency FTT—which was inflating both companies' balance sheets—trust in both companies
collapsed and triggered a bank-style run.

Lastly, in March of 2023, Silicon Valley Bank (SVB), which was a holder of ~$3.3BB in CRCL
reserves (8% of total reserves at the time) collapsed. Prior to the collapse, SVB had received a
significant amount of uninsured deposits from tech start-ups, which the bank invested in long-
term "hold-to-maturity" fixed income securities. However, as interest rates rose, the bonds lost
value and created unrealized losses. This was amplified by a funding crunch for tech start-ups,
who then withdrew billions in deposits. When SVB announced plans to raise money to cover
these losses, a bank run occurred, resulting in the closure of the bank.

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We view sentient headwinds faced by CRLC that emerged from the Terra Luna and FTX blowups
to be unjustified. CRCL had a reserve-backed model completely different from Terra Luna's
algorithmic stablecoin, and a transparent approach to reserve management that was
completely different from FTX's black-box approach. Having said this, if the FDIC had not bailed
out Silicon Valley Bank—and CRCL's $3.3B holdings—a de-pegging of USDC could have been in
the offing. It is important to note, however, that CRCL has attempted to mitigate the risk of a
similar situation happening today by selecting large, systemically critical financial institutions
as reserve-management partners (i.e., BlackRock, BNY, and GSIBs).

Industry Overview
What is a stablecoin?
A stablecoin is a type of cryptocurrency whose value is pegged to another asset, typically—
though not always—a fiat currency. As the name implies, stablecoins are designed to maintain a
stable and consistent value, relative to the underlying, pegged asset. Most stablecoin models
(including CRCL’s USDC) are “collateralized”, meaning the stablecoins in circulation are backed
by liquid, high-quality reserve assets (US treasuries and dollars in CRCL’s case). So, when a user
deposits $1 with Circle, the company mints and returns a stablecoin to the user and holds the $1
deposit in reserve.

On a more technical level, “minting” a stablecoin means creating a digital token via a smart
contract in a blockchain (such as Ethereum, Solana, etc) that basically functions as an
immutable IOU, etched into the public record. This token can then sit as a store of value, or it
can be transferred or otherwise deployed. At the sole discretion of the user, however, the
stablecoin can be converted back into $1, with the issuer returning fiat currency to the user,
before deleting or “burning” the previously minted stablecoin.

While not relevant to CRCL, there is another flavor of stablecoin (“algorithmic”) where the asset
peg is maintained via an automated process that adjusts the supply of tokens based on market
price fluctuations. If an algorithmic stablecoin’s price increased above the peg (say $1.01), the
protocol would automatically create new supply to push the price down. And if the price moved
below the peg, the protocol would reduce supply by eliminating tokens. This model has proven
to be ineffective with a history of high-profile failures, most notably the 2022 implosion of Terra
USD (UST) which de-pegged from the US dollar, triggering a massive sell-off with the native
LUNA token losing 96% of its value in one day.

Separately, though also irrelevant to CRCL, are different types of collateralized stablecoins
pegged to commodities (such as PAXG and XAUT, each indexed to 1 troy ounce of gold) and
crypto-backed stablecoins (such as DAI and SUSD). As for the latter, crypto-backed stablecoins
typically require cryptocurrency to be “pledged” at an over-collateralized level in order to
receive the stablecoin (to account for potential decreases in value of the underlying crypto
assets). While DAI utilizes smart contracts to manage supply, it is not algorithmic, given that it is
fully collateralized and does not depend on an algorithm to maintain its peg.

To be clear, CRCL’s USDC model is 100% collateralized, pegged to the US dollar (or to the euro,
in the case of CRCL’s EURC), with reserves held in the form of US cash and equivalents. It has no
algorithmic features.

Stablecoins such as USDC enable decentralized finance (DeFi)

Stablecoins were initially conceived as a way to bridge the divide between fiat and crypto
financial ecosystems. Decentralized finance (DeFi) applications often require crypto assets to be
deposited and held for varying lengths of time, and are designed to generate an income stream
for depositors. In this context, stablecoins provide two key benefits. First, they enable holders of

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fiat currency to participate in DeFi. And second, they substantially reduce (if not nearly
eliminate) the volatility inherent to other crypto currencies (i.e., that could also be used to
participate in DeFi), thereby creating more predictable, favorable conditions for lending,
borrowing, staking, and yield farming, among other DeFi activities.

We believe the most common DeFI use cases for stablecoins are in the following areas:

• Crypto trading: In order to gain exposure to crypto assets trading, whether layer 1’s like BTC,
ETH, or SOL, or alternative tokens, users need to deposit funds into a crypto exchange before
making trades. Converting fiat currency into stablecoins provides users with an on-ramp to
transact in the crypto ecosystem.

• Staking: Staking refers to the process of holding or “locking up” cryptocurrency to support
blockchain network operations in return for rewards (i.e., yield or tokens/coins). This could
include staking for transaction validation or governance participation. We believe stablecoins
provide a better option for staking compared to other crypto currencies due to their price
stability, overall accessibility, and reward predictability.

• Yield farming: Going one layer deeper, yield farming is when a user provides cryptocurrency
to DeFi protocols, typically decentralized exchanges (DEXs) or lending platforms, to earn
rewards. An example of this would be depositing USDC into a liquidity pool on Uniswap, with
which a user can facilitate trading or lending, and in return, the yield farmer receives
transaction fees for their contribution. Stablecoins are critical in this scenario, due to their
consistent price in comparison to other volatile crypto assets.

• Derivatives: In recent years, traditional financial applications like futures, swaps, and
options have entered the DeFi ecosystem. Users can now use stablecoins to purchase BTC
futures, buy call/put options on various crypto assets, as well as perpetual swaps. Today,
many platforms like Binance and Bybit offer BTC futures, which are settled in stablecoins,
allowing users to trade without exposure to the more volatile underlying asset. Similarly, on
Deribit, accounts are funded with stablecoins like USDC for trading options, allowing the user
to pay premiums and settle contracts in a more stable asset.

• Crypto funds transfer: Transferring money across blockchains is typically enabled through
blockchain interoperability protocols or bridges. In this scenario, assets will be locked,
effectively removing the asset from circulation, and wrapped, creating a derivative asset
representing the locked asset on the destination chain. When transferring back, the wrapped
token is burned and and the original asset is released. Stablecoins, and more specifically
CCTP, provide instant minting/burning of tokens across integrated chains, leading to a faster
and more fraud-proof mechanism to transfer assets.

The larger stablecoin opportunity is likely to be in traditional financial

services, outside the “Cryptoverse”
Today, the actual movement of dollars across legacy financial infrastructure comes with fees
and inefficiencies, whether it be time, the number of players involved, or general barriers to
access. In our view, stablecoins may begin to solve these problems, allowing the movement of
digital money in a relatively seamless/permission-less way on a global scale. And while we do
not expect stablecoins to replace fiat currency, we do view them as a critical enabler of
blockchain-based financial technology, which is likely to grow in importance in the years ahead,
we believe.

We see compelling opportunities for stablecoins in the following areas:

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• Emerging market inflation hedge. Today, we believe the most widespread use case for
stablecoins is to provide users in emerging markets with exposure to USD. In some emerging
markets, local currencies are often burdened by high inflation and volatility, eroding
purchasing power and trust in domestic financial systems. Many consumers in these markets
hold and transact in physical US dollars to eliminate the impact of local-currency inflation
and preserve wealth. Instead of converting devalued local currency into physical dollars, an
emerging market consumer can now exchange local currency for USD-backed stablecoins. It
is then not difficult to imagine consumers in global jurisdictions plagued by high inflation and
poor financial infrastructure potentially using stablecoins to make purchases.

• Foreign exchange (FX). Stablecoins provide users with a more efficient multi-currency
operation, which lacks the high fees and delays that come with traditional FX conversion. If a
European investment firm wants to fund a real estate acquisition in Japan, an originating
financial institution (OFI) for the investment firm converts EUR to EURC and sends it to a
beneficiary financial institution (BFI) in Japan, who then seamlessly exchanges it for JPY at a
competitive FX venue onchain and settles instantly.

• Treasury and liquidity. Multi-national enterprises typically have inefficient treasury

operations, given the complexity of moving capital across subsidiaries and geographies to
manage working capital, distribute salaries, pay suppliers, and handle intra-company funds
transfers. We believe stablecoins offer a better alternative than many traditional payments
methods. In a scenario specific to CRCL, we will use a U.S.–based enterprise that sells
products across Asia and wants revenue earned from those sales converted from Philippine
pesos to USD. The U.S. company will use its beneficiary financial institution (BFI) that is
connected to CPN to discover a local originating financial institution (OFI) in the Philippines.
That OFI will then collect the pesos earned from the sales in Asia, convert them to USDC, and
then transmit the USDC to the U.S.–based BFI. That BFI will then convert the USDC into USD
and deposit the funds into the company’s treasury account. And specific to intra-company
transfers, it is not difficult to imagine a blockchain-based treasury platform, where—instead
of transferring funds in and out of dozens of global bank accounts—a corporate would
transfer stablecoins internally, only to be “de-converted” into fiat currency at the local level
on an as-needed basis.

• Retail payments settlement. Payments settlement presents another opportunity for

stablecoins to provide a more efficient service. Today, settlement for a consumer payment at
a merchant location can take up to several days. Merchant acquirers collect payments from
issuing banks on behalf of customers with settlement instructions provided by the payment
networks. Acquirers then remit funds to merchants via wire transfers, ACH—and in the case of
international merchants—SWIFT. A stablecoin-based settlement would effectively create a
global, standardized settlement network, increasing both speed and liquidity, while reducing
counterparty risk.

• Supply chain finance/liquidity. Given the complexity of multi-national supply chains,

stablecoins may come to provide users with a faster and easier way to transact across
borders. Given the at-times lengthy payment settlement timelines (particularly for cross
border payments) corporate payers have substantial amounts of liquidity tied up waiting for
payments to settle. The instantaneous settlement of stablecoins would increase the velocity
of payments and therefore increase liquidity. Taken a step further, the programmable nature
of blockchain technology itself would lend itself nicely to commercial AP/AR. Smart contracts
could imbue commercial payments with “if then” logic. For example, only release funds once
goods have been shipped, etc.

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• Tokenized asset/trading settlement. Legacy systems are heavily relied on for clearing and
settling trades, but this process is often hindered by differing time zones, various
intermediaries, and slow reconciliation, which can create liquidity and counterparty risks. We
believe stablecoins will come to represent a critical enabler of instant, 24/7, programmable,
and verifiable transfers of assets. If tokenized securities are delivered on a shared,
cryptographically secure ledger, real-time settlement finality would reduce T+1 or T+2
settlement to seconds. The issue, however, is that “settlement finality” requires a
counterparty payment method that matches the speed of blockchain-based securities
transfers (i.e., instant transfers require instant payments). Stablecoins are perfectly suited for
this use case. And if smart-contract programmability also makes its way into tokenized asset
markets, stablecoins might come to play an even more essential role in terms of trade
settlement.

A snapshot of the stablecoin landscape

Today, the stablecoin market is dominated by two major players, USDT from Tether (~$154B
coins in circulation) and USDC from Circle (~$61B). While there are many new entrants looking
to gain share, other coins (such as the USDP from Paxos or PYUSD from PayPal) have yet to see
significant adoption. In Figure 7 (2018-present) and Figure 8 (2024-present) below, we illustrate
stablecoin share amongst the top 10 players, which includes fiat-backed, commodity-backed,
and algorithmic coins. The graphic makes clear that both USDT and USDC have maintained
their dominant market positions for quite some time, despite many new entrants in the space.
Lastly, as a reminder, while Central Bank Digital Currencies are similar to stablecoins, CBDCs are
issued and backed by central banks, making them legal tender, and are therefore not
stablecoins.

FIGURE 7. Stablecoin Market Share (2018-Present) FIGURE 8. Stablecoin Market Share (2024-Present)

250 250
Billions
Billions

200 200

150 150

100 100

50 50

- -
1/1/2019
7/1/2019

1/1/2021
7/1/2021
1/1/2022
7/1/2022

1/1/2024
7/1/2024
1/1/2025
1/1/2020
7/1/2020

1/1/2023
7/1/2023

USDT USDC TUSD FDUSD PYUSD USDP GUSD USDT USDC TUSD FDUSD PYUSD USDP GUSD

Source: The Block Pro, Barclays Research Source: The Block Pro, Barclays Research

The GENIUS Act and the STABLE Act

The Guiding and Establishing National Innovation for U.S. Stablecoins Act or GENIUS Act was
passed by the Senate on 6/17. At this point the proposed legislation has been sent to the House
of Representatives, who will reconcile the bill with the House’s own Stablecoin Transparency
and Accountability for a Better Ledger Economy Act or the STABLE Act. Following the
reconciliation process, a combined bill will make its way to the White House for a signature.

At the same time, we note that there appears to be some appetite in the House to attempt to
fuse the GENIUS/STABLE Act with a separate piece of proposed legislation that has already seen
several mark-ups: The Digital Asset Market Clarity Act (CLARITY Act), which attempts to establish
that most cryptocurrencies are, in fact, commodities rather than securities, and that,

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correspondingly, the CFTC—rather than the SEC—would have regulatory jurisdiction over
crypto. President Trump indicated in a social media post that he would prefer a “clean” bill
returned from the House to the Senate to expedite passage, but a risk remains that the House
may seek to broaden the scope of the GENIUS Act to include crypto market structure
clarifications, at which point the Senate would need additional time to absorb and respond to
key changes. Along these lines, at a recent public event, House Financial Services Committee
Chair French Hill explained that his short-term goal is to get both payment stablecoin and
market structure legislation to the President's desk by August recess.

We contrast key provisions of the GENIUS Act vs. STABLE Act below:

• Defining a stablecoin: The GENIUS Act defines a stablecoin as a digital asset pegged to a fiat
currency (such as the US dollar), redeemable at a fixed value, and used for payments or
settlements. Given that commodities like gold are not mentioned as acceptable reserves,
commodity-backed stablecoins will be excluded. Similarly, algorithmic stablecoins are
excluded due to insufficient external reserves. Lastly, national currency or a security issued
by an investment company registered under the Investment Company Act of 1940 are not
stablecoins. The GENIUS Act does leave the door open for algorithmic stablecoins in the
future, subject to further regulatory review, while the STABLE Act imposes only a 2-year
moratorium.

• Stablecoin issuers & licensing: Both banks/credit unions and subsidiaries of non-bank
institutions will be eligible to issue stablecoins, but they must register and be approved by
the appropriate federal or state regulator. While the GENIUS Act does not explicitly ban Big
Tech from issuing stablecoins, they will be required to establish regulated subsidiaries
dedicated to stablecoin operations. The GENIUS Act utilizes dual-licensing where issuers with
<$10B in issuance are to be regulated by a state and those with >$10B in issuance are
federally regulated. The STABLE Act slightly differs here by centralizing federal oversight with
less state-level discretion.

• Reserve requirements: The GENIUS Act requires every $1 stablecoin issued to be backed by
at least $1 in high-quality, liquid assets (i.e., 100% reserve backing). These assets include
cash, Federal Reserve balances, insured bank/credit union deposits, US Treasuries with ≤90
days maturity, Treasury repos, government money market funds, or other similar government
assets approved by regulators. Additionally, the GENIUS Act restricts the use of reserves for
coin redemptions, as well as certain ultra-safe investments such as Treasury repos in limited
cases. The STABLE Act slightly differs by requiring reserves to consist of US treasuries, cash, or
federal reserve balances.

• Redemption & priority payout: In bankruptcy, stablecoin holders have first priority on
reserves, taking precedence over the issuer’s other general creditors in order to prevent
stablecoin holders from incurring losses due to issuer insolvency. Both Acts also require
monthly disclosure of the number of coins in circulation and the composition of reserves,
with CEO/CFO sign-off and reviewed quarterly by independent accountants. Issuers with
>$5B in circulation must submit audited annual financial statements.

• Operational restrictions (no dividend or yield payments): Both Acts explicitly prohibit
stablecoins from paying interest or dividends or returns to holders. This prevents stablecoins
from being packaged as investment products and therefore avoiding securities regulation.
Any interest generated from reserves belongs to the issuer. Additionally, issuers may only
engage in core activities (issuance, redemption, reserve management, custody) unless given
special regulatory approval.

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• AML & freezing obligations: The GENIUS Act folds stablecoin issuers into the Bank Secrecy
Act as “financial institutions”, which means they must establish robust AML and sanctions
compliance programs, including KYC and suspicious activity reporting. Additionally, the Act
adds technical capability requirements, mandating issuers freeze, seize, burn, or block
transfers of stablecoins upon receipt of a lawful federal court or regulatory order.

• Foreign issuer restrictions: The GENIUS Act sets a phased tightening for stablecoins like
Tether (USDT), which is registered overseas but serving U.S. users. Three years after
enactment, unlicensed foreign stablecoins will be prohibited from being issued or sold to the
U.S. public. The Treasury may recognize foreign stablecoins if they come from jurisdictions
with comparable regulatory frameworks, agree to freeze illicit transactions, act in compliance
with U.S. lawful orders, and hold sufficient U.S. reserves. Even so, foreign issuers must
register with the OCC and accept ongoing supervision. The Act also includes an “Unwelcome
Status" Clause, whereby unlicensed foreign stablecoins are not considered cash equivalents
and may not count as capital or collateral for U.S. regulated institutions. The STABLE Act is a
bit more lenient, allowing foreign stablecoin issuers in the U.S. if they are regulated under a
comparable regulatory regime (via a comparability assessment from the U.S. Treasury
Secretary) and consent to U.S. oversight (i.e., reporting and examination requirements). The
STABLE Act provides an 18-month grace period to comply with these requirements.

Circle is the first MiCA compliant stablecoin issuer, opening the door to
the European Union.
On July 1st, 2024, Circle became the first global stablecoin issuer to comply with the European
Union’s Markets in Crypto-Assets (MiCA) regulation. MiCA institutes uniform EU market rules for
crypto assets to support market integrity and financial stability across the 27 member states.
Key provisions for those issuing and trading crypto-assets (including asset-reference tokens and
e-money tokens) cover transparency, disclosure, authorization, and supervision of transactions.

CRCL’s USDC and EURC are considered e-money tokens (EMTs), because they are pegged to a
single fiat currency (e.g., USDC to USD and EURC to EUR). Similar to the STABLE/GENIUS Acts,
MiCA requires EMTs to be backed 1:1 by fiat-denominated assets held in a reserve, and that they
can be redeemed at any time. Additionally, MiCA requires white paper publishing, regular
reserve reporting, Digital Token Identifiers (DTIs), and an Electronic Money Institution (EMI)
license. CRCL secured an EMI license from France’s banking regulator, the Autorité de Contrôle
Prudentiel et de Résolution (ACPR), which allows the company to issue USDC and EURC as
MiCA-compliant EMTs across the European Economic Area (EEA) via its French entity: Circle
Internet Financial Europe SAS. The EMI license enables CRCL to “passport” its services across
the EEA without individual country licenses.

Company Overview
Circle Internet Group (CRCL)
Circle operates one of the largest stablecoin networks in the world, anchored around USDC, the
company’s 1:1 reserve-backed USD denominated stablecoin. Today, there is over ~$60B of USDC
in circulation across ~4.9M meaningful wallets (i.e., onchain digital wallets holding $10 or more
of USDC). In order for an institution to obtain USDC, they must open a Circle Mint account,
which—after receiving compliance/screening approval—can be used to mint/redeem USDC
through CRCL. Upon receipt of fiat funds, CRCL will mint USDC (or EURC) and deposit them into
the customer’s Circle Mint account. From there, the customer can deploy the USDC on various
blockchains (as seen in Figure 9 below). As of March 31, there were 1,834 Circle Mint customers.
While Circle Mint is currently only available to institutions, individuals can still hold and trade
stablecoins in the secondary market. USDC is available natively on 22 blockchains, including

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Algorand, Aptos, Arbitrum, Avalanche, Base, Celo, Ethereum, Hedera, Linea, NEAR, Noble, OP
Mainnet, Polkadot, Polygon PoS, Solana, Sonic, Stellar, Sui, Unichain, World, XRP, and ZKsync.

FIGURE 9. The Process of Minting and Deploying USDC

Source: Barclays Research

Today the majority of CRCL revenue (~99% of total revenue) comes from Reserve Income, which
is driven by a rate of return generated on assets held in reserve, historically at a modest
discount to SOFR. Other Income (~1% of total revenue) is driven by the company’s ancillary
offerings, including developer services, integration services, and tokenized funds. Within
developer services, CRCL earns fee revenue on CPN and CCTP (more on this below), as well as
Circle Wallets and Contracts. Integration services include fee revenue from connecting/
integrating Circle products across blockchain networks. Lastly, CRCL issues USYC, a tokenized
money market fund, which serves as an onchain representation of the shares in Hashnote
International Short Duration Yield Fund Ltd. However, yield-bearing digital assets are
“securities” under U.S. laws, and therefore the company only offers this product internationally
today.

The Circle Reserve Fund

Circle is focused on sound reserve management to ensure liquidity and preserve user assets.
The company holds ~90% of USDC reserves in the Circle Reserve Fund, a government money
market fund pursuant to Rule 2a-7 under the Investment Company Act of 1940. The Circle
Reserve Fund is managed by BlackRock with the reserves held in the custody of The Bank of
New York Mellon. The remaining ~10% of USDC reserves are held as cash in accounts, primarily
with banks designated as GSIBs or global systemically important banks by the Financial
Stability Board. These GSIBs are subject to the higher capital and liquidity requirements and the
greatest level of regulatory supervision relative to smaller financial institutions. A small fraction
of USDC reserves is held as cash within several additional banks in order to facilitate the flow of
funds from reserves to Circle Mint customers. Lastly, all EURC reserves are held in cash.

CRCL provides extensive reporting, which includes: 1) daily updates to the composition of the
Circle Reserve Fund (via BlackRock), 2) weekly reports on reserve assets, minting, and
redemption (via Circle), 3) monthly third-party assurance over the value and composition of
these assets (via Deloitte), and 4) an annual full circle audit (conducted by Deloitte). Lastly, in
order to provide robust liquidity (i.e., converting stablecoins to fiat currency), Circle Liquidity
Services are integrated with the existing financial system through various settlement banks.
These banks provide multiple rails including 24/7/365 funds flow capabilities, wires, ACH, SEPA,
and similar regional domestic bank transfer networks.

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Barclays | Circle Internet Group Inc.

FIGURE 10. CRCL Reserve Fund Composition

Source: Company Filings, Barclays Research

Other Potential Revenue Drivers

As with other digital financial networks, Circle invests in products, APIs, and innovation to drive
adoption. Two important offerings include: 1) the Circle Cross-Chain Transfer Protocol
(CCTP) which allows 1:1 USDC cross-chain transfers, and 2) the Circle Payments Network (CPN)
which allows financial institutions to facilitate cross-border payments via stablecoins.

CCTP: Circle’s CCTP or Cross-Chain Transfer Protocol provides end-users with a compliant and
cost-effective way to transfer USDC from one supported blockchain to another. CCTP works by
first redeeming USDC on the source chain and then issuing USDC on the destination chain,
relying on a cryptographic attestation, or receipt, to prove that the USDC has been properly
redeemed before the corresponding USDC can be reissued on another blockchain. This action
differs from the riskier yet common “wrapped token,” where a tokenized representation of a
particular digital asset is moved from one blockchain to another.

Currently, there are two distinct versions of CCTP, V1 and V2. While both versions will provide
users with secure USDC transfers across blockchains, they differ in functionality and
performance. CCTP V1 only supports Standard Transfer constrained by blockchain finality on
the source blockchain (~13-19 minutes for Ethereum and L2 chains), while CCTP V2 offers
Standard Transfer and adds Fast Transfer and Hooks. Fast Transfer enables USDC transfers
between blockchains at faster-than-finality speeds (~8-20 seconds on EVM chains) and Hooks—
which attach metadata to burn messages, thereby enhancing cross-chain composability and
allowing developers to execute custom logic at the destination chain. Additionally, CCTP is
available as a permissionless public protocol that works alongside the core USDC stablecoin
protocol, opening the door for developers to build external applications and products that
utilize CCTP.

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Barclays | Circle Internet Group Inc.

Given that standard transfers do not currently generate revenue for the company, we will be
walking through an example using Fast Transfer, which typically includes a ~1 basis point fee.
The process begins with a user accessing an application powered by CCTP V2 and initiating a
Fast Transfer of USDC to a recipient's wallet address on the destination chain. The application
will then facilitate a burn of USDC, which is followed by Circle attesting to the event after soft
finality. Until hard finality is reached, a Fast Transfer Allowance is debited by the burn account.
The application then receives the attestation and mints USDC on the destination chain. The Fast
Transfer Allowance is credited, and the recipient receives the minted USDC on the destination
blockchain, completing the transfer. Since launch (April 2023) to the end of Q1, CCTP V1 has
handled ~$41B in transfers, with $16.3B of transfers occurring in 1Q25 alone, representing
~321% y/y growth. CCTP V2 was launched on March 11 and is currently available on Arbitrum,
Avalanche, Base, Ethereum, Linea, and Sonic.

CPN: Circle Payments Network or CPN is a protocol layer that connects eligible financial
institutions (including banks, neo-banks, payment service providers, virtual asset service
providers, and digital wallets) to facilitate real-time settlement of payments using USDC and
EURC. While still early days, CPN is designed to support a broad spectrum of money movement
use cases for businesses, consumers, and institutions—including remittances, supplier or retail
payments, payroll, capital markets settlement, FX, treasury, and onchain finance. CPN utilizes a
governance framework to ensure ecosystem participants meet strict eligibility standards,
including licensing, AML/CFT compliance, financial risk management, and cybersecurity
protocols. Additionally, CPN utilizes smart contract infrastructure and modular APIs, enabling
third-party developers to build directly on top of CPN.

Within CPN, Members or Participating Financial Institutions (PFIs) serve as counterparties that
originate, facilitate, or receive payments across the network. PFIs may act as either Originating
Financial Institutions (OFIs), which initiate payments on behalf of senders, or Beneficiary
Financial Institutions (BFIs), which receive stablecoin payments and either facilitate last-mile
fiat payouts or provide custody services. And, CPN service providers, whether FI or non-FI, offer
value-added technology solutions and financial services (i.e., liquidity or FX) to CPN members
and end users.

Today, CPN fees only make up a small portion of Other Income. There are three primary fees
associated with CPN transactions, including payout fees, FX spreads, and a CPN network fee.
Payout fees compensate BFIs for local fiat disbursement/processing, FX spreads reflect liquidity
risk and conversion costs, and a network fee (variable basis-point fee that differs by geography)
is used to support core network functions. As CPN gains scale and new value-added solutions
are added by third-party developers, the company could implement additional usage-based
fees, including for services such as: tools for fraud detection, risk/compliance management,
wallet infrastructure, escrow, and billing. CRCL plans to use a portion of network/marketplace
fees to reinvest in core priorities (i.e., infrastructure, R&D, incentives).

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Barclays | Circle Internet Group Inc.

FIGURE 11. Circle Payments Network (CPN)

Source: Barclays Research

Executive Team
Jeremy Allaire, Co-Founder, Chairman & Chief Executive Officer: Mr. Allaire has served as
Chairman and CEO since the founding of the company in 2013. Prior to Circle, Mr. Allaire served
as co-founder and CEO of Brightcove, CTO of Macromedia, and co-founder and CTO of Allaire
Corporation. Mr. Allaire holds a B.A. in political science and philosophy from Macalester College.

Jeremy Fox-Geen, Chief Financial Officer: Mr. Fox-Geen has served as CFO of Circle since 2021.
Prior to Circle, Mr. Fox-Geen served as the CFO for both iStar and Safehold, and before that
served as CFO for McKinsey & Company, North America. Mr. Fox-Geen has also held senior
leadership positions with PricewaterhouseCoopers, Citigroup, and McKinsey &
Company. Mr. Fox-Geen holds an M.A. in mathematics and philosophy from Oxford University.

Heath Tarbert, President: Mr. Tarbert has served as President since January 2025 and Chief
Legal Officer since 2023. Mr. Tarbert served as the Chief Legal Officer of Citadel Securities from
2021-2023, and prior to that, Chairman and Chief Executive of the CFTC. Earlier in his career, Mr.
Tarbert served as Assistant Secretary of the Treasury, U.S. Executive Director of the World Bank
Group, Associate White House Counsel, and as a law clerk at the Supreme Court. He holds a B.S.
in accounting and international business from Mount St. Mary’s University, a J.D. and S.J.D.
from the University of Pennsylvania, and an [Link]. and [Link]. in comparative law from Oxford
University.

Nikhil Chandhok, Chief Product & Technology Officer: Mr. Chandhok has served as Chief
Product and Technology Officer since January 2025 and prior to that, served as CPO from
2022-2024. Before coming to Circle, Mr. Chandhok held various senior product development
roles at Meta and before that helped develop products and software for Google, YouTube, and
Microsoft. Mr. Chandhok holds a B.E. in computer engineering from Pune University and an M.S.
in computer and information science from Ohio State University.

Valuation & Comps

CRCL is the first of its kind, a high growth and profitable stablecoin issuer at scale. In
recent years, there has been an increasing number of public company investors looking to gain
exposure to crypto and blockchain technology. Aside from owning the underlying assets,
however, there are only a few ways to play the theme, whether it be through BTC treasuries like

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Barclays | Circle Internet Group Inc.

MSTR, Crypto ETFs, or crypto miners like MARA. In our view, CRCL is the first and only way to
invest in blockchain-native infrastructure. With that in mind, we believe the stock has
significant scarcity value. Additionally, we expect the company to continue enjoying headline
momentum, as many other players in the financial technology space look to build out
stablecoin offerings (and potentially partner with CRCL to do so). Likewise, we expect the
eventual passage of U.S. stablecoin legislation in the coming months (and a steady drumbeat of
headlines about key legislative votes and milestones).

In Figure 12 below, we compare CRCL to a few different comp groups, namely payment
networks, other crypto & blockchain-related assets, and digital payments players. Our primary
comp group consists of COIN as well as payment networks V and MA. We also include MSTR,
given the company's singular crypto-focused strategy (and scarcity value). Our secondary comp
group consists of digital payments players PYPL, XYZ, and ADYEN and also HOOD, given the
company's crypto offerings. We are also including BLK in this group, given the close partnership
and relative dependence on reserve income.

Our $215 price target is derived from an equally weighted Price-to-Sales valuation + DCF. We
apply a Price-to-Sales multiple of 57x to our F26 revenue estimate of $995M. The multiple is a
premium relative to the average multiple of payment networks and digital payments peers but
is a discount relative to BTC treasury company MSTR. This reflects CRCL's scarcity premium,
above-market average growth, and industry-leading margin profile.

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Barclays | Circle Internet Group Inc.

FIGURE 12. CRCL Comp Table

EBITDA Revenue EV/EBITDA EV/Sales Revenue Growth Pirce-to-Sales
Market
Company Ticker Price EV
cap FY25E FY26E FY25E FY26E FY25E FY26E 25E 26E FY25E FY26E FY25 FY26

Primary Comps

Coinbase COIN $353.43 $90,020 $86,564 $3,043 $3,580 $7,353 $8,097 28.5x 24.2x 11.8x 10.7x 21% 10% 12.2x 11.1x

Visa V $348.61 $690,989 $692,987 $27,568 $30,956 $39,546 $43,726 25.1x 22.4x 17.5x 15.8x 10% 11% 17.5x 15.8x

Mastercard MA $550.32 $499,717 $510,650 $19,612 $22,220 $31,871 $35,695 26.0x 23.0x 16.0x 14.3x 14% 12% 15.7x 14.0x

Strategy MSTR $383.88 $107,234 $116,983 $48 $58 $460 $480 2460.7x 2023.9x 254.1x 243.8x -1% 4% 232.9x 223.5x

Secondary Comps

Robinhood HOOD $83.03 $73,271 $74,166 $1,834 $2,232 $3,693 $4,258 40.4x 33.2x 20.1x 17.4x 29% 15% 19.8x 17.2x

PayPal PYPL $73.64 $71,617 $72,582 $6,975 $7,382 $32,695 $34,567 10.4x 9.8x 2.2x 2.1x 3% 6% 2.2x 2.1x

Block XYZ $66.63 $40,979 $38,609 $3,308 $4,038 $25,108 $27,742 11.7x 9.6x 1.5x 1.4x 3% 10% 1.6x 1.5x

BlackRock BLK $1,047.82 $162,335 $171,001 $9,428 $10,842 $22,504 $25,251 18.1x 15.8x 7.6x 6.8x 11% 12% 7.2x 6.4x

€
Adyen ADYEN € 58,204 € 39,893 € 1,486 € 1,955 € 2,841 € 3,548 26.8x 20.4x 14.0x 11.2x 38% 25% 20.5x 16.4x
1,576.60

Mean 23.4x 19.8x 11.4x 10.0x 16% 13% 36.6x 34.2x

Circle Internet

Circle CRCL $180.43 $40,153 $39,067 $420 $486 $887 $995 93.0x 80.4x 44.0x 39.3x 12% 38% 45.3x 40.4x
Priced as of 6/27/25 market close. For full disclosures on each covered company, including details of our company-specific valuation methodology and risks, please refer to http:⁄⁄[Link].
Source: Bloomberg, Barclays Research Estimates for CRCL

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Barclays | Circle Internet Group Inc.

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Primary Stocks (Ticker, Date, Price)
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Barclays | Circle Internet Group Inc.

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Accenture, Inc. (ACN) Affirm Holdings, Inc. (AFRM) Automatic Data Processing, Inc. (ADP)
AvidXchange Holdings, Inc. (AVDX) Block, Inc. (XYZ) Circle Internet Group Inc. (CRCL)
Cognizant (CTSH) Corpay Inc. (CPAY) EPAM Systems (EPAM)
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Green Dot Corp. (GDOT) Marathon Digital Holdings Inc. (MARA) Marqeta, Inc. (MQ)
Mastercard Inc. (MA) MicroStrategy Inc. (MSTR) Nayax Ltd. (NYAX)

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Barclays | Circle Internet Group Inc.

NU Holdings Ltd (NU) Paychex, Inc. (PAYX) PayPal, Inc. (PYPL)

Rackspace Technology, Inc. (RXT) Remitly Global, Inc. (RELY) Repay Holdings Corp. (RPAY)
Riskified Ltd. (RSKD) Shift4 Payments Inc (FOUR) Telus Digital (TIXT)
Upstart Holdings Inc. (UPST) Visa Inc. (V) Western Union (WU)
WEX, Inc. (WEX)

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Barclays | Circle Internet Group Inc.

Circle Internet Group Inc. (CRCL / CRCL)

Stock Rating: OVERWEIGHT
Industry View: POSITIVE
Closing Price: USD 180.43 (27-Jun-2025)

Rating and Price Target Chart - USD (as of 27-Jun-2025)

Currency=USD

300

250

200

150

100

50

07-Jun-2025 14-Jun-2025 21-Jun-2025

Closing Price

Source: IDC, Barclays Research

Link to Barclays Live for interactive charting

Publication Closing Price* Rating Adjusted Price

Date Target

A: Barclays Bank PLC and/or an affiliate has been lead manager or co-lead manager of a publicly disclosed offer of securities of Circle Internet Group
Inc. in the previous 12 months.
CE: Barclays Bank PLC and/or an affiliate is a market-maker in equity securities issued by Circle Internet Group Inc..
D: Barclays Bank PLC and/or an affiliate has received compensation for investment banking services from Circle Internet Group Inc. in the past 12
months.
J: Barclays Bank PLC and/or an affiliate is a liquidity provider and/or trades regularly in the securities by Circle Internet Group Inc. and/or in any
related derivatives.
L: Circle Internet Group Inc. is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate.
Valuation Methodology: Our $215 price target is derived from a blend of two valuation techniques, equally weighted: 1) relative Price-to-Sales
valuation, which yields a value of $221 per share; and 2) our discounted cash flow (DCF) model, which yields a value of $209. Relative Price-to-Sales:
We apply a multiple of 57x to our F26 Revenue estimate of $995M. The multiple is a premium relative to the average Price-to-Sales multiple of
payment networks and digital payments peers but is a discount relative to BTC treasury company MSTR. This reflects CRCL's scarcity premium, above-
market average growth, and industry-leading margin profile. DCF: We assume free cash flow growth at a ~31.3% CAGR from 2026-2036, a WACC of
8.9%, and a terminal growth rate of 5.0%.
Risks which May Impede the Achievement of the Barclays Research Valuation and Price Target: Risks include a lower interest rate environment,
material deceleration in USDC in circulation, no uptake in payment-related products, regulatory uncertainty, inability to compete with new entrants,
and deterioration in margin profile because of distribution concessions.
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