Company: CRCL
Filing Date: 2025-04-18
Form Type: S-1/A
Source: 0001193125-25-084832
Chunk: 340

Company: Circle Internet Group, Inc.
Filing Date: 2025-04-18
Form: S-1/A
Chunk 340
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 value of the underlying digital asset. Within the obligation to return digital asset collateral is a feature indexed to the underlying digital asset that is not clearly and closely related to a debt instrument and therefore meets the definition of a derivative, which requires bifurcation. Such feature is bifurcated and recorded at fair value through Digital assets (gains) losses and impairment on the Consolidated Statements of Operations. In the first quarter of 2023, the Company designated the embedded derivatives associated with the obligation to return digital asset collateral related to stablecoin lending as the hedging instrument in a fair value hedge relationship to hedge the fair value exposure of the corresponding digital assets. Subsequent to the fair value hedge designation, changes in the fair value of the hedged item were recorded to Digital assets (gains) losses and impairment along with the associated changes in the fair value of the embedded derivative in the Consolidated Statements of Operations. The hedging relationship was de-designated upon the adoption of ASU 2023-08 on January 1, 2024. The Company enters into certain strategic investments in the form of forward contracts to purchase a specified quantity of digital assets. Certain of these contracts are accounted for as derivatives or investments with embedded derivatives, and accounts for these derivatives and embedded derivatives within Investments on the Consolidated Balance Sheets. The derivatives and bifurcated embedded derivatives are marked to market through Other income (expense), net on the Consolidated Statements of Operations. F-32

The fair value of the Company’s derivatives and embedded derivatives are as follows (in thousands):

| Table 10.1. Fair Value of Derivative and Embedded Derivative Assets and Liabilities |     |   | December 31, 2024 |     |   | December 31, 2023 |
|:------------------------------------------------------------------------------------|:----|:--|------------------:|:----|:--|------------------:|
| Derivative and embedded derivative assets:                                          |     |   |                   |     |   |                   |
| Investments - embedded derivatives                                                  |     | $ |             8,982 |     | $ |             3,521 |
| Investments - derivatives                                                           |     | $ |               350 |     | $ |               587 |
| Derivative and embedded derivative liabilities:                                     |     |   |                   |     |   |                   |
| Obligation to return digital asset collateral - embedded                            
 derivatives (1)                                                                     |     | $ |                 — |     | $ |             1,392