Circle posted $701.3 million in revenue and reserve income in the second quarter this year, but net profit was only $48.2 million. On Nov. 1 local time, blockchain media outlet The Defiant reported the gap reflects distribution costs, operating expenses and taxes.
The $701.3 million recorded on Circle’s books combines revenue and reserve income. That amount does not translate directly into company profit. After deducting distribution costs, operating expenses and taxes, net profit fell to $48.2 million.
Circle’s earnings structure relies heavily on managing reserves backing USDC. Not all income generated from the reserves stays with Circle. Even if reserve income grows, Circle’s share shrinks if distribution costs paid to outside parties rise.
The results showed that, in assessing the stablecoin business, it is difficult to judge profitability based only on issuance scale or the total amount of reserve income. They also confirmed a structure in which distribution costs, operating expenses and taxes sit between reserve income and net profit.
Hyunwoo Choo
cookinpapa@d-today.co.kr