Circle revenue boosted as stablecoin demand rises amid volatility; shares up

By Pritam Biswas

May 11 (Reuters) - Circle ‌reported higher ​quarterly revenue ​and reserve income on Monday, driven by increased adoption and circulation of its stablecoin, pushing its shares 2% higher in early trading.

Market ‌volatility and the Middle East conflict pushed investors to rotate out ⁠of risky cryptocurrencies and into stablecoins to park capital earlier this year.

This was underscored by ‌cryptocurrency exchange Coinbase's results last week, ‌which reported dropping trading volumes. Coinbase has a strategic partnership with Circle.

The rollout of Europe's MiCA framework and the passing of the U.S. GENIUS Act, ​which provide a clear legal framework for digital assets, boosted the adoption of USDC, Circle's flagship stablecoin and the world's second-largest by market value ⁠after Tether.

Circulation of USDC rose 28% from a year earlier to $77 billion at the end of the first ​quarter. Total revenue and reserve income grew 20% to $694 million.

"From a long-term perspective, it's tough to be bearish on Circle Group," ​said Andrew Rocco, stock strategist at Zacks ‌Investment Research.

Wall Street expects stablecoins to become one of the biggest themes within finance in the coming years and the next ⁠multi-trillion-dollar market opportunity.

Interest-rate cuts late in 2025 also benefited the company, as Circle invests the cash backing its tokens in bank deposits and short-dated U.S. Treasuries, earning interest on ⁠those holdings. As a result, its income is highly sensitive to policy changes by the ​U.S. Federal Reserve.

"Rates have cycles, and we are building a company that's going to be living through many rate cycles," CFO Jeremy Fox-Green said in an interview with Reuters, when asked ‌about the potential future impact of monetary policy easing.

The firm went public in a stellar debut on the New York ‌Stock Exchange last year, paving the way for similar companies to test their luck ⁠in the public markets.

Circle's shares ‌closed at $113.67 on Friday, up ​about 43% year to date and more than three times their IPO price of $31.

(Reporting by Pritam Biswas in Bengaluru; Editing by ‌Pooja Desai)

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