Demand for stablecoins strengthened during the quarter after renewed Middle East tensions increased market volatility, prompting investors to shift some funds from riskier crypto assets into stablecoins.
Circle's strategic partner, cryptocurrency exchange Coinbase (COIN.O), highlighted those industry headwinds last week when it reported a slump in its trading volumes.
Stablecoins are cryptocurrencies designed to maintain a fixed value, usually against the U.S. dollar, with USDC ranking as the world's second-largest dollar-backed stablecoin behind Tether's USDT.
Circle's USDC circulation rose 19% in the second quarter to $73.3 billion and the stablecoin's onchain transaction volume jumped 151% on a year-on-year basis.
However, reserve return rate - the yield generated by the cash and short-term U.S. Treasuries backing its USDC stablecoin — dropped by 66 basis points in the second quarter to 3.5%.
Higher circulation volumes helped offset the drop in returns. Circle Chief Financial Officer Jeremy Fox-Geen has previously noted the company is built to navigate multiple interest rate cycles.
Wall Street expects stablecoins to become one of the biggest themes within finance in the coming years and the next multi-trillion-dollar market opportunity.
The New York based company also strengthened its regulatory standing after receiving approval for a U.S. national trust bank charter, allowing it to operate under federal oversight and reinforcing its push to serve institutional customers.
Circle's revenue and reserve income rose 7% to $701.3 million in the quarter ended June 30. The company reported a net income of 18 cents per share attributable to common shareholders in the quarter ended June 30, compared with analysts' estimates of 17 cents per share, according to LSEG-compiled data
Shares of the stablecoin issuer has shed nearly 20% so far in 2026.
"Our quarterly financial results reflect the current rate environment and a crypto market that has slowed – both are conditions outside our network. But near-term activity tells a different story," said Jeremy Allaire, Co-Founder, CEO, and Chairman at Circle.
