JPMorgan analysts have revised their revenue forecasts for Circle and Coinbase, citing the new deal with the Hyperliquid platform as a key risk factor. In my assessment, this event is indeed shifting the balance of power in the stablecoin market, and the consequences may be more profound than they initially appear.
The Essence of the Changes
In May, Coinbase and Circle updated their partnership terms with Hyperliquid. Now, the U.S. exchange considers USDC held on the perp-DEX as assets placed "on the platform" and earns income from the reserves of these funds. At the same time, 90% of this amount is passed on to Hyperliquid. Previously, reserve income was split almost equally between Coinbase and Circle — this was standard practice for their partnership.
Hyperliquid holds approximately $6 billion in USDC, accounting for about 8% of the total token supply in circulation. The platform is among the largest trading venues in the crypto industry and leads among decentralized perpetual futures exchanges. In July, Hyperliquid's trading volume exceeded $150 billion, and its share relative to Binance grew to 11.5%.
A "Prisoner's Dilemma" for Circle and Coinbase
JPMorgan described the new arrangement as a "prisoner's dilemma" for both companies. Experts noted that the change in the relationship with Hyperliquid creates a risk of competition between Circle and Coinbase over USDC distribution, undermining their partnership. Against this backdrop, the bank lowered profit forecasts for both companies.
An additional pressure factor was the weakening of the crypto market. Since March, the circulating supply of USDC has decreased from $80 billion to $73 billion, and the total market capitalization of the stablecoin sector has dropped by $10 billion since May. However, JPMorgan emphasized that in the long term, higher interest rates could partially support income from USDC reserves.
The Japanese Vector
On July 14, Japan's largest payment system, JCB, and Circle signed a memorandum of understanding to develop solutions based on stablecoins. The companies will explore the possibility of using USDC for cross-border payments, domestic settlements, and payments for goods at Japanese merchants, including by tourists. The first phase will be a pilot for internal fund transfers within JCB.
JCB serves approximately 140 million cardholders and over 40 million merchant locations worldwide. At the end of June, Circle also announced plans to launch a currency settlement service based on USDC for local companies in partnership with Japanese financial corporation Nomura, which is scheduled to launch in 2027.
My comment: The partnership with Hyperliquid is a double-edged sword. On one hand, it provides USDC with enormous liquidity, but on the other, it creates a dangerous precedent where a major player can dictate terms. For Circle and Coinbase, this could mean losing control over the profitability of their reserves. In the long term, if Hyperliquid continues to increase its market share, we may see further redistribution of profits in favor of decentralized platforms, undermining the traditional revenue model of stablecoin issuers.