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USDC has settled roughly $32 trillion in adjusted transfer volume during 2026, according to Coin Metrics analysis through August. That represents about 77% of all stablecoin transfer volume, against $8 trillion for USDT.
Circle's revenue tells a different story. In the second quarter, reserve income supplied $667.7 million of $701.3 million in total revenue and reserve income, or 95.2%, while transaction revenue came to $5.3 million.
The gap between those two numbers is the company's defining problem. USDC moves at extraordinary velocity, and almost none of that movement generates revenue for the entity that issues it.
USDC's annualised velocity is 741 times, roughly ten times USDT's 74 times, despite USDT holding a market capitalisation more than $100 billion larger.
Key Takeaways
- USDC settled about $32 trillion in adjusted transfer volume through August, roughly 77% of the stablecoin market.
- Reserve income was 95.2% of Q2 revenue, with transaction revenue at $5.3 million.
- Velocity is 741 times annualised, ten times USDT's rate despite a far smaller supply base.
- Most volume is market plumbing, with 69% of Base activity from DEX liquidity provision.
- Arc's September 16 mainnet launch is Circle's clearest attempt to build a fee surface on that activity.
What the Volume Actually Is
Coin Metrics ran a bottom-up decomposition rather than reporting raw totals, examining transfer volume through tagged lending contracts, decentralised exchange pools, and known exchange wallets. The composition matters more than the headline.
On Base, 69% of USDC volume involved decentralised exchange liquidity provision and 23% involved flash loans. That is automated market infrastructure, not commerce, and a single flash loan generates transfer volume without moving net capital anywhere.
The analysis is explicit about its limits. Coin Metrics treated its tagged shares as lower-bound estimates, with roughly 8% of Base volume and 33% of Ethereum volume falling outside identified categories, and that residual could include payments, bridging, or treasury activity without being safely relabelled as commercial payments.
The two volume figures in circulation are not interchangeable either. Circle reported $14.8 trillion in onchain transaction volume for Q2, up 151% year over year, which measures something different from Coin Metrics' $32 trillion adjusted figure covering the year through August, a measurement divergence common across the trackers we reference in our stablecoin infrastructure landscape.
The Rate Sensitivity Behind the Numbers
Circle's Q2 disclosures show precisely how much its revenue depends on something it does not control. Average daily USDC circulation rose 25.2% year over year, which contributed roughly $147.4 million of additional reserve income.
A 66 basis point decline in average yields then removed about $113.9 million of that gain. Net reserve income ended roughly $33.5 million higher, meaning a quarter of circulation growth was largely absorbed by falling rates.
That arithmetic is the clearest available illustration of the business model. Circulation growth is the lever Circle can pull, and interest rates are the lever that determines whether pulling it produces anything.
Distribution costs compound the exposure. Circle paid $412 million in distribution, transaction, and other costs during the same quarter, so gross reserve income and retained profit are separated by a further 59% of revenue.
Why This Matters for Stablecoins
The finding complicates a claim the industry makes routinely. Transfer volume is cited as evidence that stablecoins are becoming payment infrastructure, and this decomposition shows that for USDC, most of that volume is crypto-native financial machinery rather than money moving between people or businesses.
The velocity contrast with USDT reinforces it. USDC turns over ten times faster than USDT despite a much smaller supply, which reflects USDC's embedding in DeFi and institutional settlement rather than broader everyday use.
The revenue structure also explains a strategic pattern visible across the sector. Issuers earning almost entirely from reserve interest are building networks, chains, and payment products precisely because reserve income scales with balances and rates rather than with usage, a shift we mapped in our Circle 2026 roadmap analysis.
It also sharpens a critique regulators have been making. The Bank for International Settlements argued last week that stablecoins fail as payment at scale, and a volume profile dominated by liquidity provision and flash loans is evidence that will be cited on both sides of that argument.
What Arc Has to Prove
Arc's public mainnet launches on September 16, and it is Circle's most direct attempt to charge for activity USDC already enables elsewhere. Network fees would create a revenue line that scales with usage rather than with rates.
The bar is lower than replacing reserve income. Arc does not need to displace 95% of revenue to matter, it needs to demonstrate that Circle can capture a repeatable share of transactions that currently generate nothing for it.
The measurable tests arrive quickly. Whether mainnet launches on schedule, what kinds of transactions dominate, whether applications generate sustained activity outside mechanical liquidity loops, and whether Circle begins reporting material growth in transaction or subscription revenue.
Retained economics will matter as much as gross fees. Circle already learned that lesson on the reserve side, where distribution agreements consume the majority of what the business generates, and the outcome bears on the wider argument about whether stablecoins can function as payment infrastructure at all, which we covered in our BIS Jackson Hole analysis.
Conclusion
Thirty-two trillion dollars of transfer volume demonstrates that USDC is deeply embedded in onchain finance. It does not demonstrate that Circle has built a payments business.
The distinction is the whole point of the analysis. Volume measures reach and liquidity, revenue measures monetisation, and Circle currently has an enormous amount of the first and very little of the second outside interest income.
September 16 turns that into a scoreboard. If Arc converts even a small share of existing activity into fees, the revenue mix begins to change, and if it does not, Circle remains a company whose earnings are set by the Federal Reserve rather than by how much its product is used.
FAQ:
1. How much USDC volume has been transferred in 2026?
Coin Metrics recorded approximately $32 trillion in adjusted USDC transfer volume during 2026 through its August analysis, representing about 77% of total stablecoin transfer volume. USDT settled roughly $8 trillion, or 19%, over the same period despite holding a substantially larger market capitalisation.
2. Where does Circle's revenue come from?
Almost entirely from interest on reserve assets. For the three months ended June 30, 2026, reserve income supplied $667.7 million of Circle's $701.3 million in total revenue and reserve income, or 95.2%, while transaction revenue was $5.3 million.
3. What is driving USDC transfer volume?
Largely crypto-native financial infrastructure rather than consumer payments. On Base, 69% of USDC volume involved decentralised exchange liquidity provision and 23% involved flash loans. Coin Metrics treated its categories as lower-bound estimates, with about 8% of Base volume and 33% of Ethereum volume outside identified categories.
4. Why is USDC's velocity higher than USDT's?
USDC's annualised velocity is 741 times against USDT's 74 times, roughly ten times higher despite USDT holding a market capitalisation more than $100 billion larger. The gap reflects USDC's embedding in decentralised finance, institutional settlement, and US-regulated markets, while USDT's usage is weighted toward offshore holding and remittance flows.
5. What is Arc and why does it matter?
Arc is Circle's blockchain infrastructure, scheduled for public mainnet launch on September 16, 2026. It represents the company's clearest attempt to build a direct fee surface around transaction activity, creating revenue that scales with usage rather than with reserve balances and interest rates.
Disclaimer:
This content is provided for informational and educational purposes only and does not constitute financial, investment, legal, or tax advice; no material herein should be interpreted as a recommendation, endorsement, or solicitation to buy or sell any financial instrument, and readers should conduct their own independent research or consult a qualified professional.
