Company: CRCL
Filing Date: 2025-05-16
Form Type: S-1/A
Source: 0001193125-25-121234
Chunk: 139

Company: Circle Internet Group, Inc.
Filing Date: 2025-05-16
Form: S-1/A
Chunk 139
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 in connection with the SVB failure and we honored one-for-one redeemability of USDC by Circle Mint customers at all times, we believe the SVB failure was a contributing
factor to the subsequent decline in USDC in circulation. Since the SVB failure, we have continued to invest in and refine our reserve management structures, including by strengthening our governance around reserve management (see
“Business—Reserve management standard”), improving analysis and monitoring of counterparties (considering factors such as customer concentration, asset liability management, capital structure, profitability, and externalities),
implementing end-of-day sweeps to manage counterparty risk at settlement banks, and holding the significant majority of cash reserves at GSIBs.

While our view is
that in the long-term, USDC in circulation will be driven by secular growth in the adoption of the internet financial system, as well as our introduction of new products within the Circle stablecoin network, in the short term we believe isolated
events or temporary trends can have meaningful impact on USDC minting and redemptions. For example, we believe that the regional banking crisis in the United States in March 2023—and most notably the SVB failure discussed above—spurred
outsized redemptions in the weeks following a brief price dislocation of USDC in certain secondary markets. Similarly, following the collapse of several digital asset lenders (e.g., Celsius, Voyager) in
mid-2022, we believe the subsequent rapid decline of decentralized finance lending market activity (which was a notable industry use case for USDC at the time) resulted in significant redemptions due to the
reduction in need for USDC deployment to such protocols. Finally, particularly in times of uncertainty for the stablecoin and digital assets industries, we believe that our uniquely robust connectivity with traditional banks has resulted in USDC
serving as an off-ramp (i.e., channel into fiat currency) from certain digital asset enterprises that lack meaningful banking coverage, 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