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Circle Tops Profit Estimates as Stablecoin Circulation Surges

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Circle (CRCL.N) reported stronger-than-expected third-quarter profits on Wednesday, driven by surging adoption of its flagship USDC stablecoin and higher reserve income amid expanding global use of digital dollars.

The company said USDC’s circulation more than doubled from a year earlier to $73.7 billion, as stablecoins — digital tokens backed by safe assets such as U.S. Treasuries — continue to gain traction with traditional financial institutions and regulators worldwide.

Circle earned an adjusted 36 cents per share, easily beating analysts’ expectations of 22 cents, according to LSEG data. Total revenue and reserve income rose 76% year-on-year to $739.8 million, surpassing forecasts of $700.5 million.

The gains come as the Trump administration’s Genius Act, introduced earlier this year, set the first clear legal framework for U.S. dollar-backed stablecoins, positioning the United States to become a leader in regulated digital payments.

Despite the upbeat earnings, Circle’s stock fell about 3% premarket after it raised its full-year operating expenses forecast to between $495 million and $510 million, citing new investments in platform growth and rising payroll taxes.

The company also faces the prospect of lower reserve income if interest rates decline, prompting efforts to diversify revenue streams through innovation. Earlier this year, Circle launched Arc, a new public blockchain designed to handle stablecoin transactions and support cross-border payments, merchant services, and DeFi integrations.

European Commission says MiCA rules already tackle stablecoin risks

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The European Commission said on Friday that the EU’s landmark crypto regulation, MiCA, already provides a robust framework to handle risks linked to stablecoins, pushing back against the European Central Bank’s call for stricter safeguards.

Stablecoins—digital tokens tied to fiat currencies like the U.S. dollar or euro—have grown rapidly in recent years, prompting debate over how they should be regulated. While the United States has moved to promote their use, the ECB has warned that some models could threaten financial stability.

At the center of the dispute is whether multinational stablecoin issuers can treat tokens created inside and outside the EU as interchangeable under MiCA’s “multi-issuance” model. In a letter to EU Commissioner Maria Luis Albuquerque this week, six crypto trade groups, including Circle, urged Brussels to clarify that such structures are allowed.

A Commission spokesperson told Reuters that MiCA already provides “a proportionate framework for addressing risks” and said guidance confirming how multi-issuance operates will be published “as soon as possible.”

The ECB’s Systemic Risk Board, chaired by Christine Lagarde, argues that cross-border token issuance could lead to runs on EU reserves if holders outside the bloc attempt to redeem with EU entities during market stress. Stablecoin issuers, however, maintain that adequate reserve management can prevent such instability.

Analysts at J.P. Morgan said this week that 99% of all stablecoins are pegged to the U.S. dollar, noting that the sector’s global expansion could further boost demand for the greenback.

European Banks Plan Euro Stablecoin to Counter U.S. Market Dominance

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A consortium of nine major European banks, including ING and UniCredit, announced on Thursday that they are creating a new Amsterdam-based company to launch a euro-denominated stablecoin by the second half of next year. The move aims to reduce reliance on U.S.-backed tokens and strengthen Europe’s role in the digital payments market.

The decision comes as U.S. financial firms prepare their own stablecoins, backed by President Donald Trump’s new regulatory framework, which could further cement America’s dominance in the sector.

Stablecoins—cryptocurrencies pegged to traditional currencies—have grown rapidly in use, not only for crypto trading but also for mainstream payments and cross-border settlements. While the global stablecoin market is worth nearly $300 billion, euro-denominated stablecoins account for just $620 million, according to recent Bank of Italy figures. Dollar-pegged tokens dominate the market.

“The initiative will provide a real European alternative to the U.S.-dominated stablecoin market, contributing to Europe’s strategic autonomy in payments,” the banks said in a joint statement.

Still, the project faces skepticism from the European Central Bank (ECB). ECB President Christine Lagarde has warned that privately issued stablecoins could pose risks to monetary policy and financial stability, urging lawmakers instead to support a digital euro backed by the central bank. Some commercial banks, however, worry that such a move would drain deposits from their institutions.

In addition to ING and UniCredit, participants include Banca Sella, KBC, DekaBank, Danske Bank, SEB, CaixaBank, and Raiffeisen Bank International. A CEO will be appointed soon, and the consortium signaled that other banks may join.

A recent Deutsche Bank report underscored the urgency, noting that emerging economies are increasingly adopting dollar-backed stablecoins in place of local deposits. “This has created a global monetary dilemma: countries should adopt stablecoins or risk being left behind. Europe is under particular pressure,” the report said.

Some European efforts have struggled to gain traction. Societe Generale’s crypto unit SG-FORGE launched a euro stablecoin in 2023, but it has seen limited adoption, with just €56.2 million in circulation. Its U.S.-dollar stablecoin has even less uptake at $32.25 million.

Meanwhile, U.S. banks like Bank of America and Citigroup are exploring stablecoins, but most of the market remains dominated by non-bank players such as Tether and Circle.