Company: CRCL
Filing Date: 2025-04-01
Form Type: S-1
Source: 0001193125-25-070481
Chunk: 137

Company: Circle Internet Group, Inc.
Filing Date: 2025-04-01
Form: S-1
Chunk 137
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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.

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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 any revenue generated from USDC reserves pro rata based on the amount of US