USDC Redemptions Outpaced Mints by $4B, but ARC Token Presale Doubles Circle’s Revenue Outlook

Circle’s reserve engine navigated a challenging second quarter. Gross USDC redemptions exceeded mints by approximately $4 billion, and reserve yields declined, yet a larger balance base sustained growth in reserve income.

Its most significant opportunity lies outside its reserves. Circle doubled the midpoint of its full-year other revenue outlook, which includes an undisclosed contribution from the ARC Token presale.

Circle’s earnings release on August 5 reported gross flows of $87 billion redeemed and $83 billion minted. These rounded figures account for the roughly $4 billion gap.

According to Circle’s regulatory filing, minting converts fiat into USDC for Circle Mint customers, while redemption converts USDC back into fiat. The $4 billion difference reflects customer flow activity, distinct from reserve adequacy.

Quarter-end USDC circulation stood at $73.3 billion, compared to a quarterly average of $76.5 billion. This figure remained 19% higher than the previous year.

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Circle’s reserve return rate fell 66 basis points year over year to 3.5%. The larger average USDC balance absorbed the impact of the lower rate, lifting reserve income by 5% to $667.7 million.

The 66-basis-point drop represents a year-over-year comparison. The Federal Reserve maintained its target range at 3.50% to 3.75% in both April and June. Circle’s 3.5% figure measures the return on its reserve portfolio.

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Other Revenue Outlook Jumps Into View

Other revenue remained small relative to reserve income, though it climbed 41% year over year to $33.582 million. Circle rounded this to $34 million and attributed the growth to increases in subscription and services revenue.

The outlook shifted more dramatically. Circle raised its FY2026 other revenue guidance to $310 million to $330 million, up from the $150 million to $170 million range issued in May. The midpoint jumped from $160 million to $320 million.

The revised range includes recognized ARC Token presale revenue. Circle did not provide a breakdown for this contribution, leaving presale revenue mixed with the rest of the outlook.

Arc is Circle’s blockchain network. The company previously disclosed approximately $222 million in estimated gross proceeds from the initial ARC Token closing, plus an additional $20.25 million from a second closing. The two closings totaled approximately $242.25 million in estimated proceeds. This figure differs from recognized revenue, and the purchase agreements include repayment rights under specified circumstances.

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Circle scheduled Arc’s public mainnet for September 16. The earnings release presented this launch date separately from token revenue recognition.

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