(Reuters) -Circle beat Wall Street expectations for third-quarter profit on Wednesday, on the back of higher reserve income through its flagship USDC as stablecoin circulation increased.
Global adoption of stablecoins — digital tokens backed by low-risk assets such as U.S. dollars or Treasuries — is gaining momentum as traditional financial firms roll out new offerings in the space and regulators worldwide move toward clearer rules.
The Trump administration, which pledged to position the United States
as a global leader in cryptocurrency, enacted the Genius Act earlier this year, establishing a legal framework for regulating dollar-backed stablecoins aimed at enhancing the safety of digital payments.
Circle, which issues USDC, earns reserve income from investing the fiat reserves that back the stablecoin.
The circulation of USDC - backed by the U.S. dollar - more than doubled from a year earlier to $73.7 billion.
The stock fell 3% before the bell as Circle raised the annual adjusted operating expenses forecast to $495 million to $510 million, citing growing investment to build its platform and higher payroll taxes.
The company is also looking to diversify its revenue streams as rate cuts are expected to put pressure on its reserve income.
Earlier this year, Circle announced the roll out of Arc, a public blockchain designed specifically for stablecoin transactions, which would help the company tap into cross-border settlements, merchant payments and decentralized finance integrations.
On an adjusted basis, Circle earned 36 cents per share in the reported quarter, beating analysts' expectations of 22 cents according to data compiled by LSEG.
Circle's total revenue and reserve income surged 76% from a year earlier to $739.8 million in the three months ended September 30, topping estimates of $700.5 million.
(Reporting by Arasu Kannagi Basil and Pritam Biswas in Bengaluru; Editing by Krishna Chandra Eluri)
