Circle's latest 10-K filing reveals that its rapid USDC expansion carries steep distribution expenses tied to its partnership with Coinbase. The company paid $1.4 billion in distribution costs connected to Coinbase in 2025, a sharp increase from $924.5 million the previous year. Those payments accounted for roughly 51% of Circle's total 2025 revenue and reserve income, highlighting how much of the stablecoin's earnings flow to distribution partners. Meanwhile, USDC circulation grew 72% year over year, reaching $75.3 billion in the fourth quarter. The figures illustrate a tension in Circle's business model: while USDC continues to gain market share and adoption, a substantial portion of the resulting revenue is absorbed by the arrangements that help drive that growth, raising questions about the long-term profitability of maintaining stablecoin dominance through partner-driven distribution.
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