Binance bets $100 million on Circle. Watch this margin

Circle Internet Group (CRCL) makes most of its revenue from the reserves backing USDC, its dollar-pegged stablecoin.

More USDC in circulation can increase the reserve assets that generate interest income. Circle also pays partners to help distribute the stablecoin.

Binance is now part of both sides of that relationship.

The crypto exchange invested $100 million in Circle and signed a new five-year commercial agreement aimed at expanding USDC access, particularly in emerging markets.

Circle will continue paying Binance monthly incentives under the new arrangement.

Circle shares initially rose nearly 2% in premarket trading following the announcement.

The gain faded after the open. Shares were down about 0.8% to $93.74 around midday on Sept. 22.

The $100 million investment makes Binance a Circle shareholder.

The commercial agreement creates a separate financial relationship: Circle will continue paying Binance as it tries to put more USDC in front of the exchange’s users.

Binance went from USDC rival to Circle shareholder

Under the new five-year agreement, Binance will promote USDC across its products and expand access in emerging markets. Circle will pay a monthly incentive fee tied to USDC held through Binance’s wallet infrastructure.

The relationship looked very different four years ago.

In September 2022, Binance announced that it would automatically convert users’ existing USDC balances into its own BUSD stablecoin. It also removed several USDC trading pairs.

By November 2024, Circle was paying Binance to help expand USDC.

Circle paid Binance a $60.25 million one-time upfront fee and agreed to monthly incentive payments based partly on USDC balances held on Binance’s platform and in its treasury.

Circle expanded that relationship again in August 2025, agreeing to additional monthly incentives tied to USDC held through its Modular Smart Contract Wallet infrastructure.

The latest agreement adds something Binance did not have before: an ownership stake in Circle.

Binance has moved from promoting a competing stablecoin to distributing USDC and owning Circle shares.

Circle’s 41% RLDC margin puts distribution costs in focus

Circle’s second-quarter financials show why the payments to distribution partners matter.

The company says distribution costs paid to firms such as Coinbase and Binance have a meaningful impact on its financial performance.

Those payments depend partly on how much USDC users hold on partner platforms — something Circle says can be affected by policies and actions outside its control.

Circle groups distribution expenses together with transaction and other costs when calculating one of its key performance measures.

Circle’s Q2 distribution math

$701 million: Total revenue and reserve income.
$412 million: Distribution, transaction and other costs.
$289 million: Revenue remaining after those costs.
41%: Revenue less distribution costs, or RLDC, margin.
$324.6 million: Distribution costs related to Circle’s agreements with Coinbase.

Circle calculates revenue less distribution costs, or RLDC, by subtracting distribution, transaction, and other costs from total revenue and reserve income.

RLDC margin shows what percentage remains after those costs.

That makes the measure particularly relevant to the expanded Binance agreement.

Circle expects distribution expense to rise as it adds more distributors and approved participants. The company also said future agreements could have different financial terms depending on negotiations with each partner.

The relationship between Binance and Circle has changed significantly over the last four years.

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More USDC could offset higher partner costs

Circle ended the second quarter with $73.3 billion of USDC in circulation, up 19% from a year earlier.

Average daily USDC circulation increased 25.2% year over year.

That growth matters because every additional dollar of USDC generally requires another dollar of reserve assets backing it. A larger reserve base gives Circle more assets capable of generating interest income.

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The new Binance agreement is designed to push USDC further into emerging markets and expand its use across Binance products.

Circle has not disclosed how much additional USDC circulation it expects the agreement to generate. That leaves a specific financial question for investors: Will the additional reserve income associated with more USDC exceed the additional cost of distributing it through Binance?

The answer will depend on more than Binance’s ability to attract users.

Circle also has to contend with a variable it cannot control directly: the interest earned on its reserves.

Partner costs and interest rates remain key risks for Circle

Circle expects distribution expenses to increase as it adds partners.

The company says its results also depend on whether USDC growth comes through paid commercial partnerships or through channels that do not require the same distribution incentives.

Interest rates can change the economics even when USDC circulation rises.

Circle said the 25.2% increase in average daily USDC circulation added about $147.4 million to second-quarter reserve income compared with the prior year.

A 66-basis-point decline in average reserve yields offset about $113.9 million of that benefit. Reserve income ultimately increased by only $33.5 million, or 5.3%.

That comparison shows why USDC growth alone does not determine Circle’s earnings.

More circulation can increase the reserve base. Lower yields can reduce what Circle earns from each dollar of those reserves.

Circle’s next earnings report will give investors two concrete numbers to compare: USDC circulation and RLDC margin.

If circulation grows without pushing the 41% RLDC margin materially lower, Circle will be adding scale without allowing distribution, transaction, and other costs to consume a larger share of revenue.

If those costs grow faster, the $100 million equity investment will be much smaller than the economics of the five-year distribution relationship investors are trying to evaluate.