Company: CRCL
Filing Date: 2025-02-13
Form Type: DRS/A
Source: 0000950123-25-001965
Chunk: 307

Company: Circle Internet Group, Inc.
Filing Date: 2025-02-13
Form: DRS/A
Chunk 307
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 term of the borrowing. The embedded derivative is accounted for as a forward contract to exchange at maturity the fixed amount of the digital asset to be returned to the borrower
and recorded to the Obligations to return digital asset collateral in the Consolidated Balance Sheets. Changes in the fair value of embedded derivatives are recognized in Other income (expense), net in the Consolidated Statements of
Operations. Beginning 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 fair value of the embedded derivative and the fair value of the hedged item are recorded to Digital assets (gains) losses and impairment in the Consolidated Statements of Operations. The changes in fair value of the hedging instrument and the hedged

F-16

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

item are classified as adjustments to net income (loss) in the operating activities
section of the Consolidated Statements of Cash Flows. The receipt and return of collateral is considered a non-cash activity and has no impact on the Consolidated Statements of Cash Flows.

The Company also enters into transactions in which it receives digital assets as non-cash consideration for certain services. In
connection with the receivables, the Company recognized embedded derivatives accounted for separately until receipt. The embedded derivatives are recognized as the difference between the fair value of the underlying digital assets to be received
when the receivables are earned and the fair value of the amount that will ultimately be received based on changes in the spot price of the underlying digital asset over the term of the outstanding receivable. These embedded derivatives are
accounted for as a forward contract to exchange at maturity the fixed amount of the digital asset to be received and are recorded in Prepaid expenses and other current assetsin the Consolidated Balance Sheets. Changes in the fair value of
embedded derivatives are recognized in Other income (expense), net in the Consolidated Statements of Operations.

The Company had a borrowing with an
embedded interest rate adjustment feature indexed to the outstanding customer assets loaned that is not clearly and closely related to a debt instrument and meets the definition of an embedded derivative. Refer to Note 14 for further information.
Changes in the fair value of