Circle revises its 2026 forecast: betting on Arc and USDC resilience
In its latest financial report, Circle surprised the market by revising its 2026 forecasts upward. Analysts noted that the key driver of this optimism was one-time revenue from the pre-sale of tokens for its own blockchain, Arc. This is a strategic move that gives the company a significant financial cushion, allowing it to weather the current downtrend in the crypto market without serious disruption.
Financial performance and revised targets
The company's total revenue and reserve income in the second quarter amounted to $701 million, while adjusted EBITDA grew 8% year-over-year, reaching $143 million. However, the main news lies in the forecasts: the company raised its net revenue target for 2026 from $150-170 million to $310-330 million. At the same time, the expected revenue margin net of distribution costs (RLDC) was raised to 41.7-43.7% from the previous 38-40%. This revision points to stronger monetization beyond reserves and better operating leverage than previously assumed.
Arc: a new growth engine
Arc is the company's own layer-1 blockchain, where USDC serves as the native gas token. This is a significant shift in the business model: instead of issuing a token on third-party networks, Circle now operates its own infrastructure and can earn from transaction fees, not just reserve yields. The public mainnet launch is scheduled for September 16, and institutional validators already include giants such as BlackRock and DTCC. It was the pre-sale of the Arc token, which brought in about $180 million, that provided the main boost in the revised revenue forecast. Regular income from staking and fees will only appear after the network launches and will depend on its actual activity.
Rates and distribution risks: pressure eases
Interest rate risks and distribution costs look limited through the end of the year. Reserve yields in the second quarter stood at 3.48% and declined along with SOFR, but this source remains the foundation of the business. No sharp drop in rates is expected, so Circle's reserve yields should hold. The agreement with Coinbase was extended on the same terms, removing the risk of an increased share for the largest partner. Excluding the one-time Arc revenue, the RLDC margin for the year is expected to be around 39%, confirming the resilience of the core business.
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 the circulating supply of USDC, but it is currently contracting. The investment debate comes down to a key question: will new use cases for USDC grow quickly enough to offset the cyclical decline in on-chain activity.
USDC and USDT are increasingly serving different functions. USDT primarily works as a tool for payments and transfers, while USDC is closer to a trading, collateral, and settlement asset. This makes USDC more sensitive to risk appetite within the industry. However, it is precisely this specialization that positions USDC favorably ahead of the next recovery in activity. The bulk of the stablecoin's supply is concentrated in trading, collateral operations, and DeFi, so its circulation is highly cyclical but capable of accelerating quickly when trading volumes and capital return to the market.
My comment: Circle's forecast revision is not just an accounting adjustment but a signal of a paradigm shift. The company no longer wants to be merely a stablecoin issuer dependent on interest rates. With the launch of Arc, it is building its own ecosystem where USDC becomes not just an asset but the fuel for new financial infrastructure. The only question is whether the network can attract sufficient liquidity to justify such ambitious expectations.