The recent restructuring of agreements between Circle, Coinbase, and the decentralized exchange Hyperliquid creates serious risks for the USDC stablecoin and calls into question the sustainability of both companies' business models. Analysts at one of Wall Street's largest banks have already lowered revenue forecasts for Circle and Coinbase, pointing to a new "prisoner's dilemma" in their partnership.
Changing the Rules of the Game
In May, Coinbase and Circle updated their terms of cooperation with Hyperliquid. The U.S. exchange now considers USDC held on the perp-DEX as an asset "on the platform" and earns income from the reserves of these funds. At the same time, 90% of this amount is transferred back to the platform by Hyperliquid. Previously, according to expert estimates, Coinbase shared reserve income almost equally with Circle. This scheme fundamentally changes the economics of USDC.
The situation is exacerbated by Hyperliquid's scale: the exchange holds about $6 billion in USDC, which accounts for approximately 8% of the total token supply in circulation. In July, trading volume on this platform exceeded $150 billion, and its share relative to Binance grew to 11.5%. Hyperliquid is confidently leading among decentralized perpetual futures exchanges, and its influence on the stablecoin market is becoming increasingly significant.
A Prisoner's Dilemma for Issuers
Analysts have called the new scheme a "prisoner's dilemma" for Circle and Coinbase. Both companies are forced to compete for USDC distribution, creating internal tension in their partnership. "The change in relations with Hyperliquid highlights the problem of the partnership agreements between Circle and Coinbase. It could create a 'prisoner's dilemma' and force the companies to compete for USDC distribution," experts noted. An additional pressure factor was the weakening of the crypto market: since March, the volume of USDC in circulation has shrunk from $80 billion to $73 billion, and the capitalization of the entire stablecoin sector has decreased by $10 billion since May.
However, in the long term, higher interest rates may partially support income from USDC reserves, but this is only a temporary measure. The main problem lies in the structural dependence on Hyperliquid, which calls into question the sustainability of Circle's business model.
Japanese Breakthrough: USDC in the East
Against the backdrop of these challenges, Circle is actively seeking new markets. On July 14, Japan's largest payment system, JCB, signed a memorandum of understanding with Circle 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 at JCB.
JCB serves about 140 million cardholders and over 40 million merchant locations worldwide. At the end of June, Circle also announced plans, together with Japanese financial corporation Nomura, to launch a currency settlement service based on USDC for local companies, with a launch in 2027.
Circle's attempts to diversify partnerships and enter Asian markets are a correct step, but they are unlikely to compensate for the losses from the revised terms with Hyperliquid. As long as USDC remains hostage to one major client, its economics will be vulnerable. Investors should closely monitor how Circle and Coinbase will navigate out of this "prisoner's dilemma."