How will regulation, specifically the CLARITY Act, impact Circle's promotion strategy for USDC, especially regarding transaction-based rewards versus asset-based earnings?

The CLARITY Act provides legal certainty for financial institutions and addresses stablecoin use cases by banks. It allows platforms to incentivize users based on real-world utility and transactions, which aligns with Circle's focus on driving velocity and utility, rather than passive yield. This framework is seen as a powerful tailwind for USDC adoption. “The legislation very specifically is saying, hey, look, if you're a distributor of Stablecoins and Circle under the legislation, which Heath will talk more about, Circle can continue to enter into great economic relationships with platforms, not just in the U.S. but all around the world. But those platforms are going to -- if they want to incentivize users with stablecoins, it has to be based on real-world utility.”

How should investors think about the balance of value accruing to the Arc network itself versus Circle, and how to avoid economic tension between the two?

Arc token is designed to drive value for all stakeholders, with Circle retaining 25% of the tokens. The network's success will have significant impacts on Circle's revenue, margin, and EBITDA. Arc is seen as an additive flywheel business that powers USDC and CPN, with Circle's shareholders benefiting from both the growth of these businesses and its participation in Arc token. “Arc is a flywheel business, which powers our USDC digital and other digital assets business, which themself power CPN and Circle's shareholders retain value in that, not only through the growth in those businesses, but also through Circle's participation in Arc token.”

Could you provide an example of how Arc token creation will impact the revenue and other revenue line items, specifically when $100 million of Arc token is created?

Arc tokens will be held on Circle's balance sheet at zero cost. When obligations under the token presale are completed, the value of those tokens will be recognized as other revenue, which will then flow through to RLDC and adjusted EBITDA. Future incentive grants will also be recognized as other revenue. “The Arc tokens will be held on Circle's balance sheet at cost, which is 0, right? When we then complete the obligations under token presale we will then recognize the value of those tokens as other revenue. And that value will then just drop down to RLDC and adjusted EBITDA.”

CRCL

Circle Internet Group (CRCL) Q1 FY26 earnings call: guidance and Q&A

Q: How much adoption has there been for the Circle Agent stack, and what are the expected achievements for agentic commerce using stablecoins?

The Circle Agent stack enables AI agents to store value and transact safely. While agentic technology is new, every enterprise conversation focuses on applied AI. USDC already dominates agent payment protocols like X402 (99.8% of transactions). Management believes a meaningful portion of current activity is AI-driven and expects continued growth as AI and economic operating systems converge. “USDC represents 99.8% of all the transactions that are happening.”

Earnings call· Mar 2026 (Q1 FY26)· Financials· May 11, 2026

Source: earnings call transcript

Executive summary

Circle Internet Group Q1 FY26 — Arc Token Presale and Strong USDC Transaction Growth

Circle Internet Group is positioning itself at the convergence of AI operating systems and blockchain-based economic operating systems, aiming to transform global economic activity. The company reported strong Q1 FY26 results driven by significant USDC transaction volume growth and the successful presale of its Arc token. Circle is expanding its full-stack platform with new product launches like the Circle Agent stack and CPN managed payments, while also navigating a stablecoin market that was sequentially flat but saw USDC gain significant market share in onchain transactions.

Highlights

USDC onchain transaction volume grew 263% year-over-year to $21.5 trillion in Q1 FY26.
Adjusted EBITDA grew 24% year-over-year to $151 million in Q1 FY26.
Total revenue and reserve income grew 20% year-over-year to $694 million in Q1 FY26.
The Arc token presale raised $222 million at a $3 billion fully diluted network value.
CPN annualized total payment volume is approaching $10 billion as of May 7, up nearly 75% since last reported.

Concerns

USDC circulation ended the quarter at $77 billion, roughly flat sequentially.
The reserve return rate was 3.5% for the quarter, down 66 basis points year-on-year.
Transaction revenue declined to $6.7 million from the prior quarter, which included a $7 million benefit from the Canton coin launch.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 guidance	Unchanged high materiality	FY26	High

CRCL operating KPIs by quarter

CRCL operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2025 Q4 FY25	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
USDC in circulation	$75.3B USDC in circulation was $75.3 billion at year-end, up 72% year-on-year and notably grew faster than the overall CFX stablecoin market. Source: earnings call transcript	$77B First, we ended the quarter with $77 billion of USDC in circulation, representing 28% year-over-year growth. Source: earnings call transcript	—	+2.3%
Supported blockchain networks	30+ And we now support USDC on over 30 different blockchain networks with interoperability being a key piece of Circle's platform strategy. Source: earnings call transcript	34 USDC now operates on 34 different blockchain network platforms. Source: earnings call transcript	35 The software infrastructure that powers this open network runs on every major blockchain technology, spanning 35 blockchain networks and reaching users in 185 countries. Source: earnings call transcript	+2.9%
CCTP volume	$41B+ As noted in my introductory comments, Circle's network grew strongly with 3.5x year-on-year growth in onchain transaction volume and notably, CCTP, a critical infrastructure for interoperable usage of USDC, grew 3.7x year-over-year to over $41 billion of volume in the fourth quarter. Source: earnings call transcript	<$50B As you can see [Audio Gap] we've continued to scale the cross-team transfer protocol, reaching almost $50 billion of volume in Q1, representing 3x strategic customer capability with Arc. Source: earnings call transcript	—	—
Minting and redemption volume	$163B And that trust shows up in our fundamental liquidity with $75 billion of USDC in circulation and unmatched liquidity infrastructure that in Q4 supported $163 billion of minting and redemption volume. Source: earnings call transcript	<$150B We also remain the most liquid and available digital dollar in the world, having minted and redeemed nearly $150 billion of USDC in Q1 alone, providing reliable and compliant digital dollar dial tone through our global liquidity network all around the world. Source: earnings call transcript	$170B At the same time, we are seeing record amounts of minting and redemption of USDC with Mint on Redeem volume reaching $170 billion in Q2. Source: earnings call transcript	—
EURC in circulation	€310M In the fourth quarter, EURC reached EUR 310 million, representing 3.8x year-on-year growth and has already grown 25% since quarter end to EUR 389 million as of February 20. Source: earnings call transcript	€358M Alongside USDC's growth, we are seeing strong growth from our other digital assets, EURC, which has long been the world's largest euro stable point, grew 2x year-over-year, ending the period at EUR 358 million. Source: earnings call transcript	—	+15.5%
Enrolled financial institutions Circle Payments Network	55 We have 55 financial institutions enrolled, that's up from 29 in the third quarter. Source: earnings call transcript	136+ We've now enrolled over 136 financial institutions into using CPN products, up 36% quarter-over-quarter. Source: earnings call transcript	175 We continue to enroll new financial institutions into the network with nearly 30% quarter-over-quarter growth, reaching 175 financial institutions, and the momentum has continued. Source: earnings call transcript	—
On-platform USDC	$12.5B USDC held within Circle's platform infrastructure or on-platform USDC, grew 5.6x year-on-year to $12.5 billion at year-end, representing 17% of total circulation. Source: earnings call transcript	$13.7B USDC held within Circle's platform infrastructure grew 3.5x year-over-year to $13.7 billion in the first quarter, representing 18% of total circulation. Source: earnings call transcript	$12.4B USDC held within Circle's platform infrastructure increased 106% year-over-year to $12.4 billion, representing 17% of circulation. Source: earnings call transcript	-9.5%
Reserve return rate	3.81% The reserve return rate was 3.81% for the fourth quarter, down 68 basis points year-on-year, reflecting the decline in SOFR during this period. Source: earnings call transcript	3.5% The reserve return rate was 3.5% for the quarter, down 66 basis points year-on-year, reflecting the decline in [ SOFR ] during this period. Source: earnings call transcript	3.48% The reserve return rate was 3.48% for the quarter down 66 basis points year-on-year, reflecting the decline in Sofa during the period. Source: earnings call transcript	0 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Cross-chain transfer protocol (CCTP) volume $50 billion Q1 FY26

3x growth

Product announcements

Product	Type	Timeline
Circle Agent stack	launch	today
CPN managed payments	launch	—
Arc token presale	launch	today
SERBTC (Bitcoin product)	roadmap	—

Deals & partnerships

Meta Using USDC for creator payouts

Demonstrates major enterprises integrating USDC rather than building their own stablecoins.

DoorDash Paying out USDC to drivers

Example of global enterprises embracing USDC in their payment flows.

Polymarket Adopting USDC for funding and settlement

Used on their leading prediction market.

Arbor Bank Using USDC to power 24/7 banking

Innovative financial institution leveraging USDC.

Top exchanges in Korea Expanded relationships

Thriving market with significant growth opportunities for USDC.

DTCC Participating in a test run of Tokenized Securities Trading

Expansion in capital markets with USDC as collateral on regulated derivatives exchanges.

Kyriba Broad partnership to make USDC payment flows seamless

Kyriba is a leading treasury management platform serving thousands of enterprises and many Fortune 100 companies.

Ramp Adopting USDC for international and domestic use cases

Ramp is one of the fastest-growing fintechs in enterprise treasury and payments.

Y Combinator Driving funding operations in USDC

Cross-border and treasury flows increasingly moving to USDC across the start-up ecosystem.

A16Z crypto Lead investor in Arc token presale $222 million

Part of a broad group of strategic partners for the Arc token presale.

Apollo Funds Investor in Arc token presale

One of the world's largest asset managers participating in the presale.

Arc Invest Investor in Arc token presale

One of the world's largest asset managers participating in the presale.

BlackRock Investor in Arc token presale

One of the world's largest asset managers participating in the presale.

Janus Henderson Investors Investor in Arc token presale

One of the world's largest asset managers participating in the presale.

Bullish Investor in Arc token presale

Exchange, fintech, and capital markets firm participating in the presale.

Intercontinental Exchange Investor in Arc token presale

Exchange, fintech, and capital markets firm participating in the presale.

Marshall Wace Investor in Arc token presale

Exchange, fintech, and capital markets firm participating in the presale.

SBI Group Investor in Arc token presale

Exchange, fintech, and capital markets firm participating in the presale.

Standard Chartered Ventures Investor in Arc token presale

Leading global bank participating in the presale.

General Catalyst Investor in Arc token presale

Venture firm participating in the presale.

Hahn Ventures Investor in Arc token presale

Venture firm participating in the presale.

IDG Capital Investor in Arc token presale

Venture firm participating in the presale.

Risks & headwinds

Stablecoin market sequential flatness Q1 FY26

USDC circulation roughly flat sequentially at $77 billion

Mitigation:Focus on driving utility, expanding global reach, and increasing partnerships and use cases for USDC. Building Arc network to drive new applications.

Digital asset market decline since October 2025

45% decline in digital asset markets since their peak in October 2025

Mitigation:Underlying growth in non-crypto utility and use cases for USDC, which held up despite broader market decline.

Modest pullback in highly incentivized channels Q1 FY26

Modest pullback in certain highly incentivized channels

Mitigation:Management views this as part of normal market dynamics, with overall strong RLDC margin for the quarter. Focus on long-term growth and diversified partnerships.

Hacks and breaches in interoperability infrastructure recent past

Breach of an interoperability infrastructure company, exploited through other DeFi protocols

Mitigation:Circle's focus on foundational security, post-quantum readiness roadmap, and building institutionally ready onchain protocols with strong control structures. CCTP's safety and reliability are highlighted.

What to watch in Q2 FY26

Arc MainNet launch

soon

Current Testnet performed very well

Target MainNet launched and operational

Why it matters

Arc is a core component of Circle's strategy to build a new economic OS and drive stablecoin-native finance.

Arc is getting ready for lift-off with the ArcMainNet launch coming soon.

Find out whether CRCL delivers this. Inve re-checks your case every morning.

Q&A highlights

How much adoption has there been for the Circle Agent stack, and what are the expected achievements for agentic commerce using stablecoins?

The Circle Agent stack enables AI agents to store value and transact safely. While agentic technology is new, every enterprise conversation focuses on applied AI. USDC already dominates agent payment protocols like X402 (99.8% of transactions). Management believes a meaningful portion of current activity is AI-driven and expects continued growth as AI and economic operating systems converge.

“USDC represents 99.8% of all the transactions that are happening.”

asked by James Yaro · answered by Jeremy Allaire

2 min read 6 chapters

Detailed narrative

AI and Blockchain Convergence Strategy

Circle's core strategy is built on the convergence of new operating systems for intelligence (AI) and economic activity (blockchain). This forms a new Internet stack expected to transform the global economic system. The company believes AI-powered software machines coordinating on blockchain computers will deliver an increasing share of global economic activity, aligning with Circle's vision and mission.

USDC Growth and Market Leadership

USDC circulation ended Q1 FY26 at $77 billion, up 28% year-over-year, though flat sequentially. Onchain transaction volume for USDC grew 263% year-over-year to $21.5 trillion, with other third-party data sources putting volumes at nearly $30 trillion and market share at approximately 80% of all onchain transaction volume.

Circle minted and redeemed nearly $150 billion of USDC in Q1 alone, reinforcing its position as the most liquid digital dollar.

Arc Network and Token Presale

The Arc network is preparing for its MainNet launch, designed as an institutionally ready network for asset issuers, payment terms, and capital markets applications. Circle announced a presale of the Arc token, raising $222 million at a $3 billion fully diluted network value, with participation from major asset managers, banks, and venture firms.

The Arc token aims to bootstrap the network, align participants, and enable governance and security functions.

Circle Agent Stack and AI Integration

Circle launched its Agent stack, including agent wallets for permissionless onchain transactions, Agent Nano payments for high-frequency machine-to-machine payments, and an agent marketplace with over 500 endpoints. USDC already accounts for 99.8% of X402-Agentic payments. Internally, Circle is undergoing an AI transformation, with 85% of employees using AI tools weekly and over 600 AI-native apps deployed this year.

CPN Expansion and Managed Payments

Circle's CPN (Circle Payments Network) product line is growing, with annualized total payment volume on a trailing 30-day basis reaching $8.3 billion, up 17% quarter-over-quarter. As of May 7, it's approaching $10 billion, up 75% since the last report. The company introduced CPN managed payments to simplify stablecoin network adoption for banks and financial institutions by offloading licensing, liquidity, and compliance complexities as a managed service.

Regulatory Environment and CLARITY Act

The potential CLARITY Act is seen as crucial for providing legal certainty for financial institutions to engage with digital assets at scale. It specifically addresses stablecoin use cases by banks and broker-dealers. Management views the Act's provisions on stablecoin rewards, which incentivize real-world utility like payments and remittances, as beneficial and superior to the status quo, aligning with Circle's focus on driving utility and velocity.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.