Company: CRCL
Filing Date: 2025-02-13
Form Type: DRS/A
Source: 0000950123-25-001965
Chunk: 132

Company: Circle Internet Group, Inc.
Filing Date: 2025-02-13
Form: DRS/A
Chunk 132
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 rates and an increase in interest rates increases reserve return rates. Reserve return rate is a
contributing factor to reserve income (the other being, primarily, USDC in circulation). As such, fluctuations in interest rates may result in changes in reserve income. However, interest rates are only one contributor to reserve income, and the
other primary contributor—USDC in circulation—is inherently difficult to predict given the uncertainties in end-user and customer behavior. For example, although interest rates are positively correlated with the opportunity cost of holding
USDC versus other financial instruments, given the utility of USDC as a means for the exchange of value, an increase in interest rates does not necessarily result in a decrease in USDC in circulation (and vice versa). Any relationship between
interest rates and USDC in circulation is complex, highly uncertain, and unproven. As a result, while we are able to predict the impact of interest rate changes on the reserve return rate, given uncertainties in end-user and customer behavior and
interests and market dynamics, we are unable to accurately predict the impact of such changes on reserve income.

Exogenous events and macro trends

In March 2023, SVB failed to honor Circle’s request to withdraw $3.3 billion (approximately 8% of the USDC reserves at the time) in reserve
deposits, which was submitted prior to SVB’s failure and subsequent FDIC receivership. The FDIC receivership announcement made abruptly on Friday, March 10, 2023 caused some market concern that an inability to instantly access the deposits
held at SVB might result in USDC not being fully backed by fiat-denominated reserves. In response, we publicly affirmed that in the event SVB did not make a full return of our reserve deposits, we would cover any shortfall using corporate resources,
aligning with our commitment to maintaining the

87

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

trustworthiness, safety, and one-for-one redeemability of USDC by Circle Mint customers. Subsequent secondary market trading of USDC on certain digital asset exchanges, exacerbated by the lack of primary market liquidity given the
weekend closure of the banking system and the concurrent failure of two other banks that were part of the Circle stablecoin ecosystem, which had previously provided 24/7/365 primary liquidity infrastructure, resulted in a temporary supply-demand
imbalance, and consequently the