ARC Token Sale Boosts Circle Q3 Earnings as USDC Revenue Faces Pressure

ARC token sale drives Circle’s Q3 earnings growth

Circle, the company behind the USDC stablecoin, reported third-quarter earnings for 2026 that significantly exceeded analyst expectations. The growth was primarily driven by $182 million in revenue from a presale of its native ARC token, which helped the company overcome a decline in income from its traditional stablecoin business.

A stablecoin is a type of cryptocurrency designed to maintain a steady value, usually by being pegged to a currency like the U.S. dollar. While Circle’s total revenue and reserve income rose 17% to $865 million, the company noted that its overall revenue would have fallen compared to last year if the ARC token sale had not occurred.

Financial highlights for the third quarter

• Circle reported diluted earnings per share of $0.84, double the $0.42 expected by analysts.
• Adjusted EBITDA reached $317 million; without the ARC token contribution, this figure would have been $135 million.
• The company recognized $182 million in revenue from its ARC token presale.
• Circle reduced its total workforce by approximately 5% to align with its new strategic priorities.

Circle’s shift from stablecoin reserves to network revenue

Circle is currently transitioning its business model to focus more on payments and blockchain activity. Its flagship product, USDC, earns income from the interest generated by the cash and bonds held in its reserves. However, this income is tied to interest rates and the total amount of the token in circulation.

To diversify, Circle launched the Arc blockchain on September 16, 2026. The ARC token is designed to handle network security and governance. While transaction fees on this network are paid in USDC, the sale of ARC tokens provided a new revenue stream that protected the company's bottom line during a period of lower interest rate yields.

USDC market share and reserve performance

Despite an 8% increase in the average amount of USDC in circulation, the income generated from those reserves fell by 8% to $657.6 million. This was caused by the reserve return rate dropping to 3.5%, down from higher levels a year earlier. Competition in the market is also increasing, as USDC’s market share fell to 27% by the end of September.

New competitors are entering the space, such as the Open USD stablecoin on the Solana blockchain. This project includes partners like Mastercard and Visa and uses a model that shares reserve earnings with its business partners, providing an alternative to Circle's offerings.

Why Circle is diversifying its business model

Circle CEO Jeremy Allaire described the company's strategy as creating a platform where stablecoins, payments, and blockchain applications support each other. By moving beyond just digital dollars, the company aims to build value through network participation and new financial applications.

This diversification is intended to make the company less dependent on interest rates. Instead of relying solely on reserve income, Circle is looking toward fees from its payments network and potential rewards from network participation to sustain future growth.

Future plans for the Arc blockchain

Circle has set a target for 2027 to move its Arc blockchain to a "proof of stake" system. This transition is expected to create a new source of revenue through staking rewards, which are payments earned for helping to secure and validate the blockchain network.

The company also expects to see significant revenue from its payments network in 2027. Chief Financial Officer Jeremy Fox-Geen indicated that the company is beginning to charge for certain activities on its network as it moves toward these long-term goals.

Sources

• Cointelegraph

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