A new partnership model between Circle, Coinbase, and the decentralized exchange Hyperliquid creates serious risks for the USDC stablecoin economy, according to JPMorgan analysts. As a result, the bank has lowered its profit forecasts for both companies.
In May, Coinbase and Circle revised their partnership terms with Hyperliquid. The exchange now treats USDC held on the perp-DEX as an asset "on the platform" and earns income from the reserves of these funds. The platform then transfers 90% of this amount to Hyperliquid. Previously, according to JPMorgan estimates, Coinbase shared USDC revenue almost equally with Circle.
Hyperliquid is one of the largest players in the decentralized perpetual futures exchange market. The platform holds about $6 billion in USDC, accounting for approximately 8% of the total token supply in circulation. In July, Hyperliquid's trading volume exceeded $150 billion, and its share relative to Binance reached 11.5%.
"Prisoner's Dilemma" for Issuers
JPMorgan analysts called the new scheme a "prisoner's dilemma" for Circle and Coinbase. In their view, the change in partnership terms with Hyperliquid demonstrates a fundamental problem: companies are forced to compete for USDC distribution, undermining their joint economics. "The change in the relationship with Hyperliquid highlights a problem with Circle and Coinbase's partnership agreements. It could create a 'prisoner's dilemma' and force companies to compete for USDC distribution," experts noted.
An additional pressure factor is the weakening of the crypto market. Since March, Circle's stablecoin supply in circulation has shrunk from $80 billion to $73 billion. The total market capitalization of the "stablecoin" sector has decreased by $10 billion since May. However, in the long term, higher interest rates could partially support income from USDC reserves, JPMorgan emphasized.
Japanese Vector
Meanwhile, Circle continues its expansion in Asia. On July 14, Japan's largest payment system, JCB, signed a memorandum of understanding with the company to develop solutions based on stablecoins. The parties will explore the possibility of using USDC for cross-border payments, domestic settlements, and payments for goods from Japanese merchants, including tourists. The first phase will be a pilot for domestic fund transfers at 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 USDC-based currency settlement service for local companies in partnership with Japan's Nomura, which is scheduled to launch in 2027.
My analysis: JPMorgan's downgraded forecasts signal that even crypto industry giants are not immune to the disruptive impact of DeFi innovations. Hyperliquid, leveraging its market power, is effectively rewriting the rules of the game, forcing Circle and Coinbase to sacrifice margins to maintain USDC dominance. In the long term, if such precedents become widespread, this could lead to consolidation of the stablecoin market and a revision of issuers' business models.