Circle spends a fortune to pay Binance for distribution, but profits continue to decline

Summary of the event: Cooperative upgrades and equity tie-ins

Circle announced on September 22 that it has signed a new five-year commercial agreement with Binance and is investing $100 million in Circle to become its shareholder. This marks the third signing between the two parties since their first collaboration in November 2024, showing that Coinbase 1 has become one of USDC 's most important distribution channels.

Under the terms of the agreement, Binance will purchase 1.237 million Circle A shares at $80.84 per share at a 5% discount from closing price on September 17 and commit not to sell or hedge these shares for two years. The new deal focuses on expanding access to USDC , especially in emerging markets, with an extended contract until September 2031, but both parties can terminate early under certain conditions.

USDC is expanding at a much faster rate than the overall size of Binance

Since the first collaboration, Binance users' holdings of USDC have grown significantly. On October 1, 2024, staking users held about $1.5 billion in USDC ; and on September 1st, Binance , a reserve certificate clearly showed that this figure had risen to around $7.13 billion, an increase of approximately 376%.

Over the same period, USDC as a whole grew from $39.7 billion at the end of November 2024 to about $74.4 billion (( DefiLlama data), an increase of around 87%. This means that Binance users owned USDC , accounting for almost 10% of global circulating supply , up from less than 4% in early cooperation.

In comparison to USDT , the change is equally pronounced: in October 2024, Binance users held $21.4 billion of $ USDT versus $1.5 billion of USDC , a ratio of about 14.3:1; by September 1 this year, USDT had balances of $32.3 billion and USDC was around $7.1 billion, narrowing the ratio to approximately 4.5.1; Circle regulatory filings show that USDC -accounted for Binance .

Circle CEO Jeremy Allaire stated on X Platform that Binance as the world's largest stablecoin wallet and financial platform will help accelerate adoption of USDC in global and emerging markets.

The high cost of distribution is the central question.

The cost of this expansion was not low. Under the November 2024 agreement, Circle paid $60.25 million in upfront fees to Binance , and monthly incentives based on platform USDC holdings, with rates reset quarterly using three-month SOFR as a benchmark.

In August 2025, the two parties expanded their cooperation around Circle's modular smart contract wallet infrastructure. The new agreement consolidates and replaces the previous two arrangements, but neither of the new fees nor minimum balance commitments are disclosed.

Clear Street analysts Owen Lau and Nikhil Vijay noted in their report that the deal enhanced Circle's visibility as one of its largest distribution channels outside Coinbase , but the net economic effect remained unclear. With $3.5 billion added to USDC , a 3.5% reserve yield, annual gross revenue was about $35 million; if Binance had been allocated high binomial ratios on previous terms, Circle would have likely retained only $4-7 million.

This issue is increasingly critical to Circle's profit margins. In the second quarter, company reserve revenues were approximately $668 million compared with distribution and transaction costs of about $410 million, accounting for 61% of reserves revenue. Distribution costs associated with Binance increased by $152.1 million in 2025 [2].

Binance Transition from channel to shareholder

Another layer of the new agreement is that Binance becomes a shareholder in Circle from its distributor partnership. The $100 million investment corresponds to about 0.5% share, much smaller than the distributor plus shareholders relationship between Coinbase and Circle but retains an incentive structure tied to balance.

According to Binance CEO Richard Teng, the investment is a long-term commitment for stablecoin to make stable and reliable digital dollars available to anyone with a mobile phone.

Clear Street said it would look at the Binance USDC holding data in its third-quarter earnings and Circle's non- Coinbase distribution fees to judge how much Circle paid for maintaining this channel.

This is a risky suggestion, but it's worth considering. . . . This article is for general information only and does not constitute any investment advice. crypto asset Prices fluctuate wildly, readers should do their own research and be aware of the risks involved.