Company: CRCL
Filing Date: 2025-04-18
Form Type: S-1/A
Source: 0001193125-25-084832
Chunk: 142

Company: Circle Internet Group, Inc.
Filing Date: 2025-04-18
Form: S-1/A
Chunk 142
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 point based on the amount of USDC in circulation on such day, in consideration of our role as stablecoin issuer (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, and (iii) after deducting amounts payable to other approved participants
in the USDC ecosystem, Coinbase receives 50% of the remaining payment base. See “Business—Collaboration with Coinbase.” The issuer retention is designed to partially reimburse us for indirect costs of issuing stablecoins and the
management of the associated reserves, such as maintaining our accounting, treasury, regulatory, and compliance functions, which are generally recognized in various operating expenses including compensation expenses and general and administrative
expenses in our consolidated statement of operations.

101

These deductions are accounted for as components of the overall arrangement with Coinbase as we are not providing a distinct service to issue stablecoins and manage the associated reserves. The
Collaboration Agreement is accounted for as an executory contract and reflected in distribution and transaction costs in our consolidated statement of operations. For the years ended December 31, 2024, 2023, and 2022, we incurred $907.9
million, $691.3 million, and $248.1 million, respectively, of distribution costs in connection with our agreements with Coinbase. We expect our distribution expense to increase in the future as we add distributors and approved participants. Our
distribution expense will also increase to the extent our reserve income increases over time. We also anticipate new distribution arrangements may differ depending on our negotiations with our distributors and the circumstances in our evolving
industry.

We also incur transaction costs to pay for the blockchain network transaction fees necessary to complete transactions on supported blockchains. For a
given blockchain, we purchase the necessary digital assets in advance and, upon initiation of a transaction, we pay blockchain transactions fees using our inventory of digital assets. We expect this expense to increase going forward due to increases
in volume and rising fees on certain popular blockchain networks.

Other costs

Other costsprimarily comprise transaction services costs that we incur as the direct result of generating transaction services revenue, which include payment
processing costs such as interchange fees, ACH fees, chargebacks, and wire fees paid to third-party fiat payment processors and third-party credit card companies. These costs are primarily driven by volume-based transaction services.

Other than distribution, transaction, and