Arc token sales strengthened Circle's financial position: new forecast for 2026
Analyzing Circle's latest Q2 report, I concluded that the company made an unexpected but strategically sound move. Management not only kept quarterly metrics stable but also significantly raised its revenue and margin outlook for 2026. The key driver of this optimism was one-time revenue from the pre-sale of the native token of the Arc blockchain.
This "margin of safety" gives Circle a kind of financial cushion to weather the current downtrend in the crypto market. Excluding this one-time income, the operating picture looks more modest, but it is precisely this that provides the company with room to maneuver until the market finds its bottom.
Financial results and revised guidance
Total revenue and reserve income amounted to $701 million. Adjusted EBITDA grew 8% year-over-year, reaching $143 million. But the main update concerns the future: the forecast for "other revenue" in 2026 was raised to $310–330 million from the previous $150–170 million. At the same time, the expected revenue margin net of distribution costs (RLDC) was raised to 41.7–43.7% from 38–40%.
Such a revision points to stronger monetization beyond reserves and better operating leverage than previously assumed. In my estimates, roughly $180 million of the raised "other revenue" forecast comes specifically from the Arc token pre-sale.
Arc: a new engine, but the first fuel is the pre-sale
Arc is Circle's own layer-1 blockchain, a settlement network for stablecoin finance where USDC serves as the native gas token. The company is moving up the technology stack: previously it issued tokens for other networks, now it operates its own infrastructure. This allows it to earn from blockchain space fees rather than just reserve income.
The public mainnet launch of Arc is scheduled for September 16. Institutional validators include BlackRock and DTCC. The DTCC depository plans to integrate asset tokenization into Arc, while BlackRock intends to deploy the BUIDL fund with built-in USDC support. Such agreements give the network real reach at launch and clear use cases: tokenized securities, collateral operations, and settlements.
However, the immediate financial result came precisely from selling the token itself. Circle conducted a pre-sale of Arc before the network launch and placed the native token with investors. Recurring revenue from Arc — staking, transaction fees, and commercial services — will only appear after launch and will depend on how actively the network is adopted.
Risks from rates and distribution have softened
Circle's profit depends on three variables: the volume of USDC in circulation, the yield on reserve assets, and the share of that yield remaining after distribution costs. Reserve yield in Q2 was 3.48% and declined along with SOFR, but this source remains the foundation of the business. A sharp drop in rates is not expected in the near term, so reserve yield should hold.
Distribution costs, which eat into part of this yield, have just passed their main test: the agreement with Coinbase was renewed on the same terms, and the scenario of the largest partner's share growing has been taken off the table. Management's guidance confirms resilience: excluding Arc pre-sale revenue, the RLDC margin for the year is expected to be around 39% — the midpoint of the previous 38–40% range.
Weak on-chain activity weighs on USDC, but a cycle reversal will bring a strong rebound
Circle's long-term base case assumes 40% annual growth in USDC circulation. Currently, it is contracting. The investment debate boils down to a key question: will new USDC use cases grow fast enough to offset the cyclical decline in overall on-chain activity.
USDC and USDT are increasingly serving different functions in the on-chain dollar market. USDT primarily works as a payment and transfer tool, while USDC is closer to a trading, collateral, and settlement asset. This makes USDC more sensitive to risk appetite within the industry than USDT. In a deep downtrend, this works against the company.
However, certain segments of on-chain activity continue to expand even during a downturn. Perpetual DEXs look among the strongest. Hyperliquid remains the prime example: perpetual contract volume over the last 30 days reached roughly $200 billion. Prediction markets provide a second source of structural demand. Polymarket uses pUSD — a collateral asset fully backed by USDC.
USDC is well-positioned ahead of the next recovery in industry activity. The bulk of the stablecoin's supply is concentrated in trading, collateral operations, DeFi, and settlements, making circulation highly cycle-dependent. Supply contracts when on-chain liquidity falls, but it can accelerate quickly when trading volumes, leverage, and capital return to the market.
My conclusion: The Arc pre-sale is a sensible tactical move that gives Circle financial flexibility during an unfavorable period. However, the company's long-term success will be determined not by one-time revenues, but by Arc's ability to generate a sustainable stream of fees and drive real USDC usage. Investors should closely monitor network metrics after the September launch.
This material is not investment advice.