Circle CEO Jeremy Allaire deeply analyzed the company's paper losses under high growth, its competitive relationship with banks, the layout of new partners, and the strategic goals of its self-developed blockchain Arc. (Background: The new battleground for stablecoins: The Layer 1 route dispute between Stripe and Circle) (Supplementary Background: Circle released Q2 financial report: USDC market capitalization increased by 90% year-on-year, launching L1 blockchain Arc in Q3, CRCL rose 10% in pre-market) On the first earnings report night after going public, Circle delivered a complex answer sheet of 'paper losses and operational growth.' Total revenue and reserve income for the second quarter was $658 million, up 53% year-on-year, with adjusted EBITDA at $126 million, up 52% year-on-year. At the same time, USDC continued to expand on the circulation side, with an outstanding circulation of $61.3 billion at the end of the period, capturing 28% of the stablecoin market share. However, affected by non-cash factors totaling $591 million, including large equity compensation triggered by the IPO and changes in the fair value of convertible bonds, the company recorded a net loss of $482 million. Outside of earnings report day, the competitive framework of the industry has been rapidly rewritten this summer. The (GENIUS Act) has officially landed, bringing the boundary between 'bank-issued stablecoins' and 'licensed non-bank issuers' to the forefront. Circle's Chief Strategy Officer Dante Disparte stated in a recent interview: the real competition has just begun, and it remains to be seen whether banks will rashly issue coins. Circle's partnership landscape is also expanding. Management mentioned in a conference call the deepening cooperation with mainstream exchanges such as Binance and OKX, as well as integration with payment networks like Stripe, Visa, Mastercard, and bank infrastructure providers like Fiserv; at the same time, the rise in USDC balances on the Coinbase platform and new partner distribution agreements have also driven up distribution-related costs this season. These structural tensions of 'growth—sharing—costs' are shaping USDC's business model and ecological distribution path. Meanwhile, Circle announced its self-developed blockchain Arc aimed at stablecoin finance. It uses USDC as native Gas, pursuing ultra-high settlement speed and low volatility rates, and introduces optional privacy and compliance audit disclosure mechanisms for institutional scenarios, seen as a key step in its transition from a 'single issuer' to a 'full-stack platform.' Last night, Circle CEO Jeremy Allaire addressed several questions of utmost concern to the public during the earnings call and a live interview with The Information: · Why are there paper losses under high growth? · The future competitive relationship between banks and non-bank stablecoins under the (Genius Act) background; · The 'game-theoretic cooperation' with exchanges and the layout of new partners; · Are there plans to apply for a license in Hong Kong? · The strategic goals of the Arc chain and its industry ecological position. Beating has integrated key questions and answers so that readers can quickly and accurately understand Circle management's views on the industry and the company's plans (for the full earnings call transcript, please refer to the link below (Circle 2025 Q2 Earnings Call Full Transcript)): Subscription fees, service fees, and transaction fees, management plans to increase revenue sources 1. In the second quarter of this year, Circle's revenue grew by 53% year-on-year, but reserve interest still accounted for a large portion. How does the company reduce reliance? Jeremy Allaire: Our goal is to build the world's largest regulated stablecoin network, which is still in the early stages. Regardless of whether the future stablecoin market grows at a CAGR of 90% or 25%, the inflow scale will be huge, and we hope to continue expanding USDC's market share. In the past, the company mainly monetized USDC's monetary supply and relied on partners for distribution. However, since last year, we have launched new products at the protocol layer, blockchain infrastructure, developer tools (such as Circle Wallets), and application layer (such as Circle Payments Network, CPN), with related revenues up 250% year-on-year this season. Next, we will introduce subscription fees, service fees, transaction fees, and other higher-margin models, and we have communicated on Wall Street that these revenues could be considerable in the coming years. Adjusted EBITDA increased by 52% year-on-year, profit margin at 50%, and RLDC profit margin increased by over 200 basis points year-on-year, a large part of which comes from new business growth. We are building a full-stack system from infrastructure, stablecoin layer to payment network, developer tools, working in synergy to form multiple monetization channels, which is a necessary condition for the development of the internet financial system. 2. The second quarter USDC circulation was $61 billion. Where does the growth momentum come from? What are the future incremental opportunities? Jeremy Allaire: Recent growth reflects global market 'green light' signals for stablecoins. This is due not only to the activity in the digital asset market but also indicates that stablecoins are now viewed as usable digital cash tools. With a year-on-year growth rate of 90% and a year-to-date increase of 49%, there is immense room for future growth. Stablecoin growth is largely a result of economic activity. The digital asset market is the starting point, but interest in various segments of financial services is accelerating, with sustainable potential for decades. Third-party forecasts range from 25% to 90% CAGR, and our internal model's baseline is 40%, which can still yield considerable returns in uncertain environments. 3. How do you see USDC's adoption in cross-border remittances? Jeremy Allaire: Demand for cross-border remittances is growing, including both C2C (personal transfers) and B2B corporate cash flow. This season, we have expanded cooperation with Remitly, MoneyGram, ZEPS, etc. The primary application scenario for CPN is cross-border remittances. The advantage of USDC lies in the global liquidity network and in/out capital system built over the years, covering key nodes such as banks and payment service providers, enabling low-cost settlements between different currencies, electronic money, and bank accounts. This network effect and delivery capability are difficult to replicate, and simply 'issuing a coin' cannot solve the terminal issues of cross-border settlement. 4. Where does the $5.9 trillion on-chain transaction volume reported in the earnings come from? Jeremy Allaire: USDC on-chain transactions are spread globally, from Europe and America to emerging markets and developing countries, with P2P payments especially widely used in financial super apps. These transactions include not only fund transfers between exchanges but also various uses such as savings, investment, and payments. Foxkeen (CFO): On-chain transaction volume covers almost all financial service use cases, from C2B, B2B payments to cross-border settlements. Compared to traditional systems, this is the first universal internet architecture for capital flow, so different scenarios are intertwined on-chain, making it difficult to split precisely. 5. To create a 'winner-takes-all' market, will Circle accept higher distribution costs in exchange for growth? Jeremy Allaire: We are willing to collaborate with institutions that drive network growth, and the cooperation structure varies depending on the type of partner; it is not simply a matter of yielding reserve income. The key is a win-win, growth-oriented approach that can enhance transaction speed...

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