Circle and USDC: How the Second-Largest Dollar Stablecoin Works

What Circle is

Circle was founded in 2013. It launched USDC in September 2018 and a euro stablecoin, EURC, in June 2022, according to its annual report for 2025. USDC is issued and redeemed by two subsidiaries: Circle Internet Financial, LLC in the US and Circle Internet Financial Europe SAS in France.

In the US, Circle operates today under state money transmitter licenses, registration with FinCEN as a money services business, and New York's virtual currency license, the BitLicense. In the EU, the French subsidiary holds an electronic money institution license and a digital asset service provider registration.

Circle earns its money on the float. Customers hand Circle dollars, Circle issues the same number of tokens, and Circle invests the dollars in short-term government paper. It keeps the interest. In the second quarter of 2026, reserve income was $667.7 million, 95% of Circle's $701.3 million in total revenue and reserve income, at a reserve return rate of 3.5%.

Much of that income is passed on. Circle reported $410.4 million of distribution and transaction costs in the same quarter. Distribution costs are payments to partners such as Coinbase and Binance for holding and promoting USDC. Under the 2023 Collaboration Agreement with Coinbase, Circle first keeps an issuer portion of reserve income; Coinbase then receives income in proportion to the USDC held on its platform, plus half of what remains from USDC held elsewhere.

How much USDC is in circulation

USDC supply was $71.3 billion on 27 October 2026, 23.5% of the $303.3 billion stablecoin market, according to DefiLlama. Tether's USDT, at $181.8 billion, is the only larger one. Circle's reserve reports use a narrower count that leaves out frozen tokens and tokens created on a blockchain but not yet issued.

Supply moves in both directions quickly. In the second quarter of 2026 alone, Circle's institutional customers minted $83.0 billion of new USDC and redeemed $86.8 billion. Minting and redemption run through Circle's institutional customers on its Mint service, with Circle acting as redeemer of last resort for certain other holders. Most people buy and sell USDC on exchanges or in apps.

USDC runs on many blockchains at once. The September 2026 reserve report lists 39 networks, including Ethereum, Solana, Base and Arbitrum. On two of them, TRON and Noble, Circle now only redeems.

What backs each USDC

Circle publishes a reserve report with each monthly examination. The latest covers 4 and 30 September 2026. On 30 September, 73.88 billion USDC were in circulation against reserves with a fair value of $73.96 billion, a cushion of about $78 million. Repo here means overnight repurchase agreements, and cash includes deposits at banks and cash inside the fund. The timing line nets out deposits, withdrawals and trades that had not yet settled.

Most of the reserve, $62.47 billion, sits in the Circle Reserve Fund. It is a government money market fund operating under the SEC's Rule 2a-7, managed by BlackRock and held in custody at BNY. Circle owns all of the fund's shares, on behalf of USDC holders. Its repurchase agreements are overnight loans of cash to financial institutions, overcollateralized by Treasury securities. The longest Treasury bill in the reserve on 30 September matured on 31 December 2026, 92 days later.

The rest is cash in segregated accounts held for the benefit of USDC holders, mostly at banks the Financial Stability Board designates as globally systemically important, plus a smaller slice of directly held Treasury bills. Cash at a bank carries that bank's risk. In March 2023, USDC briefly fell below $1 when some of its reserve cash was caught in the failure of Silicon Valley Bank, as our stablecoin guide describes.

Who checks the reserves, and what the check covers

Since USDC launched, Circle has published a monthly report on its reserves from an independent accounting firm, currently a Big Four firm, according to its annual report. The report for September 2026 is dated 26 October 2026.

The engagement is an examination under the attestation standards of the American Institute of Certified Public Accountants, which is designed to give reasonable assurance. Its scope is narrow. The accountants test one assertion by Circle's management: that the fair value of the reserve assets was at least equal to USDC in circulation on two specific dates. It does not cover the days in between, and it is separate from the audit of Circle's company accounts, which Deloitte & Touche performs once a year.

Circle adds more frequent disclosure on top. Its website shows reserve composition weekly, and BlackRock's website reports on the Circle Reserve Fund daily.

The reserve report also shows that tokens can be frozen. On 30 September 2026, 131.2 million USDC were classed as "access denied" tokens, restricted from their holders to comply with a law, regulation or legal order, and excluded from the circulation count. The GENIUS Act requires every licensed issuer to have this ability, as our GENIUS Act guide explains.

Circle's position under the GENIUS Act

The GENIUS Act, Public Law 119-27, was signed on 18 July 2025 and takes effect on 18 January 2027. From then, only a permitted payment stablecoin issuer may issue a payment stablecoin in the US, with reserves of cash, deposits, Treasury bills of 93 days or less and similar assets, monthly public reserve reports and a ban on paying holders interest. Circle's annual report says some of the licensing regimes it operates under today will stop applying once the Act is in force, while several will continue.

Circle has set up a federally chartered trust bank to operate inside that system:

• December 2025. The Office of the Comptroller of the Currency (OCC) gave preliminary conditional approval for First National Digital Currency Bank, N.A., a national trust bank.
• 9 July 2026. The OCC gave final approval. The bank opened on 24 July 2026 under the name Circle National Trust, supervised directly by the OCC. At opening it offered fiduciary digital asset custody to Circle and its affiliates.
• 31 July 2026. New York's Department of Financial Services granted a limited purpose trust charter for Circle Internet Trust Company LLC.

Circle's annual report says that once fully approved, the national trust bank will oversee management of the USDC reserve. The OCC's final rule for stablecoin issuers under its supervision was published on 23 October 2026 and takes effect on 18 January 2027, the same day as the Act. Circle's existing reserve policy already limits USDC reserves to Treasuries maturing within three months, cash at global banks, overnight repo fully backed by Treasuries and government money market funds, which is close to the Act's list.

The June 2025 IPO, from the SEC filings

Circle Internet Group's final prospectus, dated 4 June 2025, offered 34 million Class A shares at $31.00 each, a total of $1.054 billion. Circle sold 14.8 million new shares and existing shareholders sold 19.2 million. The shares were approved for listing on the New York Stock Exchange under the symbol CRCL, and the underwriters, led by J.P. Morgan, Citigroup and Goldman Sachs, had a 30-day option to buy 5.1 million more from Circle.

The offering closed on 6 June 2025, according to Circle's report to the SEC that day, with gross proceeds of $458.8 million to the company before underwriting discounts and expenses. Circle received nothing from the shares sold by existing holders.

Control stayed concentrated. Class B shares carry five votes each, with their combined voting power capped at 30%, and the IPO prospectus said the Class B shares, held by co-founders Jeremy Allaire and Sean Neville and entities they control, would represent 30% of the vote after the offering. A follow-on offering in August 2025 offered 10 million more Class A shares, 2 million of them from Circle.

This guide describes the company and its token. It takes no view on the shares.

Other dollar stablecoin issuers

Circle is one of several issuers, and the GENIUS Act will put US issuers under one set of rules. Supply on 27 October 2026, from DefiLlama:

Circle's annual report names Tether as its primary competitor and groups it with offshore, unregulated issuers that operate without a federal or state money services license. Regulated financial firms are entering too. Fidelity's FIDD is issued by Fidelity Digital Assets, National Association, a national trust bank, and the GENIUS Act lets bank subsidiaries issue. Our CBDC and Stablecoin Tracker follows supply and the rulemaking as it lands.