Can Rising USDC Adoption Drive Circle's Reserve Income Higher?

Circle Internet Group CRCL observes rising USDC adoption translating into significantly higher reserve income, highlighting the strong link between stablecoin scale and revenue generation. In the third quarter of 2025, reserve income climbed 60% year over year, mainly driven by a near-doubling of average USDC circulation. This growth occurred despite a nearly 100-basis-point decline in the reserve return rate, highlighting that volume expansion, rather than interest rates, is currently the primary driving force.

USDC circulation ended in the third quarter at 108% year over year, reflecting strong demand across payments, capital markets and digital assets. Circle also continued to gain share within the dollar-backed stablecoin market, reaching roughly 29%, reinforcing its position as one of the two leading global issuers. Usage trends further support this view. On-chain activity increased significantly during the same quarter, indicating higher velocity and deeper engagement with USDC as a medium of exchange.

While reserve income is exposed to interest-rate movements, the recent performance suggests that accelerating USDC adoption could offset rate headwinds. As long as circulation growth and usage continue to scale, Circle's reserve revenue trajectory appears to be increasingly dependent on network expansion rather than macro conditions alone. This shift strengthens the case for sustained reserve income growth over time.

As reserve income remains the primary driver of revenue growth, rising USDC adoption is translating into steady financial gains. This trend is supported by the Zacks Consensus Estimate, which projects revenue growth of more than 18% in 2026.

CRCL Navigates Growing Rivalry in Stablecoin Market

Coinbase Global COIN has become a key rival to CRCL in stablecoins, backed by rising USDC balances, a clearer regulatory backdrop and deep financial resources. COIN’s $2 billion BVNK acquisition underscores an aggressive push into stablecoin payments. While Coinbase benefits from USDC distribution and reserve income, rising operating costs tied to headcount growth, rewards and compliance investments are intensifying competitive pressure on CRCL.

Fiserv FISV is emerging as a formidable rival to CRCL with the launch of its fiat-backed FIUSD stablecoin. By embedding tokenization into its vast banking and payments network, Fiserv achieves instant scale. Backed by initiatives like North Dakota’s Roughridercoin, Fiserv enables banks and merchants to adopt FIUSD or USDC without infrastructure overhauls, strengthening Fiserv’s competitive position.

CRCL’s Share Price Performance, Valuation & Estimates

In the past three-month period, Circle’s stock has declined 39.9%, underperforming the broader Zacks Finance sector’s return of 5.2% and the Zacks Financial - Miscellaneous Services industry’s fall of 9.3%.

CRCL’s 3-Month Price Performance

From a valuation standpoint, CRCL appears overvalued, trading at a forward 12-month price-to-sales ratio of 5.67, higher than the industry's average of 3.02. The company carries a Value Score of D.

CRCL’s Valuation

The Zacks Consensus Estimate for 2026 earnings is pegged at 88 cents per share, down by 4 cents over the past 30 days. This represents a sharp year-over-year improvement from a loss of 88 cents.

Circle currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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