JPMorgan revises forecasts for Circle and Coinbase amid partnership with Hyperliquid: threat to USDC economy
The new cooperation structure between Circle, Coinbase, and Hyperliquid raises serious questions about the sustainability of the USDC stablecoin business model. JPMorgan analysts see this agreement as a classic example of the "prisoner's dilemma," where both companies are forced to compete for USDC distribution, creating risks for their profitability.
Key Changes in the Partnership
In May, Coinbase and Circle updated the terms of their interaction with Hyperliquid. Now, the U.S. exchange treats USDC on the decentralized perpetual futures platform (perp-DEX) as an asset placed "on the platform" and earns income from the reserves of these funds. At the same time, 90% of this amount is transferred to Hyperliquid. Previously, Coinbase shared the income almost equally with Circle, making the model more balanced.
Hyperliquid holds $6 billion in USDC — 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%. This makes it a significant player capable of influencing the stablecoin's distribution.
Analytical Perspective: Pressure on Circle and Coinbase
JPMorgan called the new scheme a "prisoner's dilemma" for Circle and Coinbase. In their view, this change in relations could force the companies to compete for USDC distribution, negatively impacting their profits. The bank has already lowered profit forecasts for both companies, taking this factor into account.
Additional pressure comes from the weakening of the crypto market. Since March, Circle's stablecoin in circulation has dropped from $80 billion to $73 billion. The total market capitalization of the "stablecoin" sector has decreased by $10 billion since May. Although higher interest rates may partially support income from USDC reserves in the long term, the current dynamics are concerning.
Global Expansion of USDC: Japan as a New Front
Despite internal challenges, Circle continues to expand USDC's geography. On July 14, Japan's largest payment system, JCB, signed a memorandum of understanding with Circle to develop stablecoin-based solutions. 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 is a pilot for internal fund transfers at JCB.
JCB serves about 140 million cardholders and over 40 million merchant locations worldwide. The partners emphasize that "stablecoins" can reduce the costs of international transactions, increase settlement speed, and simplify payments for foreign visitors. At the end of June, Circle also announced plans to launch a USDC-based currency settlement service for local companies in collaboration with Japanese financial corporation Nomura, with a launch in 2027.
My Expert Commentary: The partnership with Hyperliquid is a double-edged sword for Circle and Coinbase. On one hand, it provides access to enormous liquidity and trading volume, strengthening USDC's position. On the other, it creates dependence on a single platform that can dictate terms, reducing margins. In the long term, Circle needs to diversify USDC distribution channels to avoid falling into the "prisoner's dilemma" trap. Expansion into Japan is a step in the right direction, but it requires time and regulatory clarity.