As USDC issuer Circle defends its costs against rival models that share reserve revenue with participants, competition is taking center stage as its largest distribution partner, Coinbase, also backs rival Open USD.
According to CoinDesk, Circle Chief Business Officer Kash Razzaghi highlighted in a blog post published Friday the expenses involved in converting stablecoins to cash, complying with regulations, and ensuring the system operates reliably. Razzaghi said that the issuer’s decision not to pay these expenses would not make them go away.
At the heart of the debate is how to share the revenue generated by the reserve assets backing stablecoins. Circle’s largest USDC distribution partner, Coinbase, is also among the backers of Open USD, which proposes a different revenue-sharing model.
Coinbase is part of two different models
Introduced in June, Open USD was backed by Stripe and BlackRock, as well as Coinbase. The initiative aims to let businesses issue stablecoins without paying fees and convert them into their underlying currency. Revenue from reserves is set to be distributed to participants after deducting a management fee. The initiative’s OUSD token is available for use.
Circle’s blog post does not mention Open USD by name. However, the approach of sharing reserve revenue is not limited to this initiative: the Global Dollar Network (USDG), led by Paxos, is also among the models that share reserve revenue with participants.
Circle says most of its revenue goes toward costs
Circle’s defense is based on how its revenue is distributed. The company said it generated approximately $1.4 billion in revenue in the first half of 2026, while allocating $819 million to distribution and transaction costs. The $473 million listed for expenses such as compliance, liquidity, and product development also included approximately $214 million in stock-based compensation and related costs.
According to the company, about 7 cents of every dollar in revenue remained as net profit. We previously covered Circle’s revenue and expense breakdown; the same figures underpin its response to the competition over sharing reserve revenue.
Circle is also working to expand its distribution partners. Binance invested $100 million in the company in September. The five-year agreement also includes a fee payment tied to USDC held through Circle’s wallet service.
What are the terms for converting USDC to cash?
Circle says standard USDC redemptions—that is, receiving cash in exchange for the token—are free and are generally completed within up to two business days. Eligible platform customers and payment flows conducted through the Circle Payments Network can access free, near-instant redemptions.
For businesses weighing their options in this competition, transaction fees are not the only consideration; how much of the reserve revenue they can receive and who bears the cost of services also matter.
Not investment advice.