The agreement that decides how Circle and Coinbase split the income from USDC entered its first three-year renewal term on Tuesday, extending the arrangement through 2029 with no change to its terms. Circle confirmed the renewal on its second-quarter earnings call on August 5, and the new term began exactly three years after the original Collaboration Agreement took effect on August 18, 2023. The contract governs who keeps the interest earned on the roughly $73 billion of cash and Treasuries backing the second-largest dollar stablecoin, and in 2024 it moved $908 million from Circle to Coinbase.
Reserve income is the interest a stablecoin issuer earns by holding customer dollars in cash and short-term government debt while the tokens circulate.
Key takeaways
- The Circle Coinbase USDC agreement renewed automatically on August 18 for three more years, running through 2029 on unchanged terms.
- Coinbase keeps 100% of the reserve income on USDC held on its own platform and roughly half the residual income on USDC held elsewhere.
- Circle paid Coinbase $908 million in distribution costs during 2024, about 54% of Circle’s revenue that year.
- USDC circulation ended the second quarter of 2026 at $73.3 billion, up 19% year over year, with 30% of it sitting on Coinbase.
Published: August 18, 2026, 09:00 UTC
How the USDC revenue split works
Coinbase collects all of the reserve interest generated on USDC held on its platform, then takes a share of what remains on USDC held anywhere else. Circle draws an issuer allocation first, and the residual reserve income from off-platform balances is divided, with Coinbase receiving roughly half.
Where the tokens sit therefore determines the money. Circle reported that 30% of USDC circulation was held on Coinbase at the end of June, while Circle itself held $12.4 billion, or 17% of circulation, on its own infrastructure.
The structure dates to August 2023, when the two companies wound down the Centre Consortium they had jointly operated. Circle took sole responsibility for issuing and governing USDC, and Coinbase took a minority equity stake in Circle. The Collaboration Agreement filed with the Securities and Exchange Commission runs an initial three-year term with automatic three-year renewals for as long as both companies keep meeting their obligations.
What the renewal costs Circle
The renewal locks in Circle’s largest expense line for another three years. Distribution payments to Coinbase reached $330.6 million in the first quarter of 2026, up from $303.2 million a year earlier, and Circle has said those costs can rise further as reserve income grows and more partners are added.
Second-quarter results show the squeeze and the offset. Total revenue and reserve income rose 7% to $701 million, while distribution, transaction and other costs came in at $412 million, up 1% from a year earlier. The margin left after distribution costs improved to 41.2%, three percentage points better than the prior year, and Circle raised its full-year outlook for that margin to a range of 41.7% to 43.7% from 38% to 40%.
Chief Financial Officer Jeremy Fox Geen told analysts the company will not introduce quarterly dividends, keeping capital for products, infrastructure and further distribution deals instead. Circle has never paid a cash dividend since listing on the New York Stock Exchange in June 2025 at $31 per share.
Open USD raises the stakes
The renewal arrives while Coinbase is also backing a competing stablecoin standard. Coinbase endorsed Open USD in June 2026, and Circle’s stock fell more than 17% as roughly 140 firms lined up behind the rival project. Visa launched a stablecoin platform built on Open USD the following month.
That matters because the off-platform revenue share only pays on USDC that exists. If Coinbase promotes alternatives and total circulation stalls, Circle keeps paying elevated distribution costs against a flat or shrinking base. The exposure runs both ways: USDC-related activity accounted for roughly 13.8% of Coinbase’s total revenue in 2024, a line large enough to appear in quarterly earnings if the relationship weakens.
JPMorgan has also warned that Coinbase’s role as Hyperliquid’s USDC treasury deployer could compress margins at both companies. Circle said about 90% of Hyperliquid’s USDC sat on Coinbase’s platform at quarter end and declined to say how the three parties divide the associated reserve income.
What comes next
Attention now shifts to Circle’s future SEC filings, which are the only place any additional disclosure about the renewed term would appear. Circle has said the Coinbase agreement does not block other distribution deals, and the company counts more than 150 partners with economic incentives to support USDC across exchanges, wallets and payment applications.
Regulation is the other variable. Circle received final approval from the Office of the Comptroller of the Currency in July to establish Circle National Trust, then won a New York trust charter three weeks later. The agency’s proposed framework for implementing the GENIUS Act covers reserves, redemption, custody, capital and audits, so compliance spending runs alongside distribution costs for as long as those rules stay unfinished. The next scheduled decision point on the Coinbase arrangement is August 2029.
Frequently asked questions
How much does Circle pay Coinbase for USDC distribution?
Circle paid Coinbase $908 million in distribution costs during 2024, roughly 54% of its revenue that year. In the first quarter of 2026 alone, Coinbase-related distribution costs reached $330.6 million, up from $303.2 million in the same quarter a year earlier.
Did the terms of the Circle Coinbase agreement change on renewal?
No. Circle told analysts on August 5 that the agreement renewed on existing terms. The contract provides for automatic three-year renewals when both companies continue meeting their obligations, so the structure signed in August 2023 now runs through 2029 unchanged.
Why does Coinbase earn money on a stablecoin it does not issue?
Coinbase distributes USDC across its products and is paid from the interest earned on the reserves backing the token. It receives all of that reserve income on USDC held on its own platform and a share of the residual income on USDC held elsewhere.
