JPMorgan Says a New USDC Deal Could Squeeze Circle and Coinbase Profits
JPMorgan trimmed its earnings outlook for Circle and Coinbase after a Hyperliquid deal reroutes USDC reserve income. Here's what it means for holders.
JPMorgan just told Wall Street it expects smaller profits from two of crypto’s biggest names — Circle and Coinbase. The bank’s research team lowered its earnings forecasts for both companies in a July 2026 report, pointing to a new revenue-sharing arrangement between the two firms and Hyperliquid, a fast-growing crypto trading platform, that changes how money made from USDC reserves gets split up.
If you hold USDC, or shares tied to Circle or Coinbase, this is worth understanding — not because your stablecoin is suddenly risky, but because it shows how the profit engine behind “safe” stablecoins can shift when big partners cut new deals.
What actually changed
USDC is a stablecoin — a digital dollar that’s supposed to always be worth $1. Circle, the company behind USDC, and Coinbase, which helps distribute it, normally earn money from the interest generated by the cash and government bonds backing every USDC in circulation. That interest income has been a major profit source for both firms.
Under the new arrangement with Hyperliquid, a large share of that reserve income — reported by Coinpedia at around 90% — now flows back to Hyperliquid instead of staying with Circle and Coinbase. Hyperliquid reportedly uses that money to buy back its own HYPE tokens, a move designed to support HYPE’s price and reward its holders.
Why JPMorgan is worried
JPMorgan’s analysts described the three-way arrangement as creating a kind of “prisoner’s dilemma” for Circle, Coinbase and Hyperliquid — a situation where each party’s individual incentives could end up working against the group’s long-term interests. The bank warned that if similar revenue-sharing terms get demanded by other trading platforms down the road, it could chip away at the broader stablecoin business model that Circle and Coinbase depend on.
In plain terms: the deal might help USDC stay competitive and widely used on Hyperliquid’s platform right now, but it hands away a chunk of the profit that used to belong to Circle and Coinbase. JPMorgan’s response was to trim its earnings estimates for both companies going forward.
What this means for everyday holders
If you simply hold USDC as a stablecoin — to save, trade, or move money around — nothing changes for you directly. USDC is still designed to hold its $1 value, and this dispute is about who profits from the reserves backing it, not whether those reserves exist.
Where it matters more is if you own stock in Circle or Coinbase, or if you’re watching HYPE. A lower earnings forecast from a major bank like JPMorgan can weigh on how investors value those companies, even if day-to-day stablecoin usage stays steady. Meanwhile, the deal illustrates a broader pattern in crypto: as competition between exchanges and stablecoin issuers heats up, companies are increasingly willing to give up revenue to win volume and loyalty — a trade-off that can boost usage short-term but squeeze margins over time.
For everyday crypto holders, the real takeaway is a reminder that stablecoins aren’t just neutral, boring dollars sitting in your wallet — there’s a whole business behind them, and deals like this one show how the profits from that business can quietly move between companies without ever touching the $1 peg you rely on.
Read more: Binance’s Reserve Report Shows More Bitcoin, Shrinking Stablecoin Cushion
