Company: CRCL
Filing Date: 2025-08-12
Form Type: S-1
Source: 0001193125-25-178989
Chunk: 128

Company: Circle Internet Group, Inc.
Filing Date: 2025-08-12
Form: S-1
Chunk 128
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 settlement banks, and holding the significant majority of cash reserves at GSIBs.

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 USDC distributed by each respective party and the amount of USDC held on each respective party’s platform in relation to the total amount of USDC in circulation. See “Business—Collaboration with Coinbase.” In August 2023, we and Coinbase entered into a Collaboration Agreement, under which we make payments to Coinbase for its role in the distribution of USDC and growth in the USDC ecosystem. These payments are determined based on the daily income generated from the reserves backing USDC, less the management fees charged by non-affiliated third parties for managing such reserves (such as asset management and custody fees