Company: CRCL
Filing Date: 2025-02-13
Form Type: DRS/A
Source: 0000950123-25-001965
Chunk: 143

Company: Circle Internet Group, Inc.
Filing Date: 2025-02-13
Form: DRS/A
Chunk 143
---
) after deducting amounts payable to approved participants (as defined below), Coinbase receives 50% of the remaining payment base. See
“Business—Collaboration with Coinbase.” The issuer retention is designed to 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. 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 $ 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 and treasury services costs that we incur as the direct result of generating transaction services revenue and treasury services revenue, respectively. Transaction services costs 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.
Treasury services costs are composed of borrowing fees payable to customers’ accounts in connection with stablecoin lending services, which were paid in kind and based on a percentage of the amount borrowed and were denominated in the related
digital asset borrowed.

Other than distribution, transaction, and other costs, we do not incur distinct costs to mint and/or redeem stablecoins.

94

CONFIDENTIAL TREATMENT REQUESTED BY C