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Morning Edition · Sunday, October 18, 2026Published at 1:07 AM EDT · New York
Circle defends its USDC revenue split as Coinbase backs a rival that pays partners more
Open USD passes reserve income to its partners after a management fee. Bitcoin traded near $81,500 on Saturday, and gold held above $4,160 an ounce.
Circle, the issuer of the USDC stablecoin, is defending the economics of its token as rival issuers offer its distribution partners a larger share of revenue. Coinbase, Circle's largest USDC partner, also backs Open USD. That competing network passes the income from its reserves to partners after a management fee. A dollar stablecoin earns most of its income from the Treasury bills and cash that back it, so the fight is over who keeps that yield.
Large US banks are moving toward the same business. Goldman Sachs, Wells Fargo and Morgan Stanley say they see tokenization, the issuing of assets as blockchain tokens, as a source of growth rather than a threat. They expect it to bring new trading, faster payments and a role for financial advisers.
Holding bitcoin directly still carries risks that money in a bank does not. Chainalysis found that one victim of last week's theft targeting Ledger hardware-wallet users was a scammer who lost $5 million in bitcoin.
Bitcoin traded at about $81,556 on Saturday, according to Coinbase. The day before, the Nasdaq Composite fell 2.1% on fears about debt-funded AI spending, while gold slipped only $5.70 to $4,164.10. Bitcoin's price has tracked technology stocks more closely than the monetary metals through this stretch.
Part of a tracked trend
Stablecoins Extend the Dollar's Reach
Dollar stablecoins keep growing as a private channel for offshore demand for US Treasury bills, and the competition to pass reserve yield to holders makes them function like money-market funds, partly offsetting the slow erosion of the dollar's reserve role.
What this means
Stablecoin issuers are, in effect, funds that hold Treasury bills, and they compete on how much of the bill yield they pass on. As distribution partners such as Coinbase demand a larger share, issuer profit margins shrink, and stablecoins come to look more like money-market funds that pay interest. Banks are exposed through deposit outflows, and the US Treasury gains a steady buyer of bills. This growth works against the desk's thesis of dollar erosion, because it spreads dollar holdings abroad through private networks. The precedent is the Reserve Fund of 1971. It passed Treasury-bill yields to savers when Regulation Q capped bank deposit rates, and money-market funds grew rapidly through the high-rate years of the late 1970s. The desk's read is that within months, the share of reserve income paid to distributors becomes the main point of competition among dollar stablecoins, and that banking regulators will be asked to limit yield pass-through. The read would be wrong if US rules bar paying yield to holders, which would remove the reason for the price war.
What to watch
- Whether Circle changes the revenue terms it offers partners. A cut to its own share would show that pass-through competition is changing issuer economics.
- Whether US banking regulators or lobbying groups propose limits on stablecoin yield. Proposed limits would show that banks see deposit loss as a real risk.
- Bitcoin's moves against the Nasdaq if the Federal Reserve raises rates. Tracking the index would confirm that bitcoin trades as a risk asset rather than a monetary hedge.
Observations to monitor, not financial advice.
Synthesized from: CoinDesk · CoinDesk · Bitcoin Magazine
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