Company: CRCL
Filing Date: 2025-02-13
Form Type: DRS/A
Source: 0000950123-25-001965
Chunk: 134

Company: Circle Internet Group, Inc.
Filing Date: 2025-02-13
Form: DRS/A
Chunk 134
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 with the net result being an inflated amount of USDC redemptions. While we believe these events and developments are nonrecurring in nature, they can have
an impact on USDC in circulation and our short-term financial results.

Distribution costs

Our distribution costs have a meaningful impact on our financial performance. Prior to August 2023, distribution costs were primarily a function of (i) the amount
of USDC distributed by Circle and Coinbase and (ii) the amount of USDC held on each respective party’s platform. Specifically, we shared any revenue generated from USDC reserves pro rata based on the amount of USDC distributed by each
respective party and the amount of USDC held on each respective party’s platform in relation to the total amount of USDC in circulation. See “Business—Collaboration with Coinbase.” In August 2023, we and Coinbase entered into a
Collaboration Agreement, under which we make payments to Coinbase for its role in the distribution of USDC and growth in the USDC ecosystem. These payments are determined based on the daily income generated from the reserves backing USDC, less the
management fees charged by non-affiliated third parties for managing such reserves (such as asset management and custody fees) and certain other expenses, which is referred to as the “payment base.” From this payment base, (i) we retain a
portion ranging from an annualized low-double-digit basis point to high tenth of a basis point based on the amount of USDC in circulation on such day, in consideration of our role as stablecoin issuer and which is designed to reimburse us for
indirect costs of issuing stablecoins and the management of the associated reserves, such as maintaining our

88

CONFIDENTIAL TREATMENT REQUESTED BY CIRCLE INTERNET GROUP, INC. PURSUANT TO 17 C.F.R. § 200.83

accounting, treasury, regulatory, and compliance functions (the “issuer
retention”), (ii) we and Coinbase each receive an amount equal to the remaining payment base multiplied by the percentage of such stablecoin that is held in the applicable party’s custodial products or managed wallet services at the end of
such day (the payment base, after deducting (i) and (ii) above, the “residual payment base”), and (iii) after deducting amounts payable to approved participants (as defined below), Coinbase receives 50% of the residual payment base.
See “Business—Collaboration with Coinbase.” As