Circle Defends USDC Margins as Rivals Pitch Yield-Sharing to Partners

Circle is pushing back as rivals target its distribution partners with promises of higher reserve yields.

Chief Commercial Officer Kash Razzaghi published a breakdown Friday showing the issuer kept roughly seven cents of net profit per revenue dollar in the first half of 2026. Total revenue hit $1.4 billion against $819 million in distribution and transaction costs. The post frames those margins as the price of running a redemption network that never closes.

Why partners are looking elsewhere

Coinbase, Circle's largest USDC distributor, has simultaneously backed Open USD — a competing network that lets businesses mint and redeem stablecoins without fees while passing reserve income minus a management fee to participants. Paxos runs a similar model through the Global Dollar Network. Both pitch a simpler value proposition: you bring the users, we share the yield.

The counterargument

Razzaghi argues that free redemptions, compliance infrastructure, and liquidity buffers are not optional line items. "The costs of redemption, compliance, and resilience don't disappear just because the issuer declined to pay them," he wrote. Circle also notes that standard USDC redemptions remain free and typically settle within two business days, with near-instant settlement now available for qualified platform customers at no extra charge.

What this means for stablecoin users

The fight is ultimately about who captures the interest on backing assets. If issuers compete on yield-sharing, margins compress — but so does the cushion that absorbs a run. Traders and businesses should watch whether "free" models maintain the same redemption guarantees when markets seize up.