Company: CRCL
Filing Date: 2025-05-27
Form Type: S-1/A
Source: 0001193125-25-126208
Chunk: 150

Company: Circle Internet Group, Inc.
Filing Date: 2025-05-27
Form: S-1/A
Chunk 150
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 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. 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

102

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, and for the three months ended March 31, 2025 and 2024, we incurred $298.8 million and $197.0 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