JPMorgan Cuts Earnings Forecasts for Circle, Coinbase Over Hyperliquid Deal
JPMorgan lowered earnings estimates for Circle and Coinbase following a new USDC revenue-sharing agreement with Hyperliquid that alters how stablecoin reserve income is distributed. The revised deal is expected to reduce earnings contributions from USDC to both companies.
Key Takeaways
- 1## The Revised Agreement JPMorgan analysts issued a research note lowering earnings forecasts for both Circle and Coinbase after Hyperliquid and Circle agreed to new terms for USDC revenue sharing.
- 2The revised agreement changes how income generated from USDC's reserve assets will be allocated among the parties involved in the stablecoin's ecosystem.
- 3## Impact on Revenue Streams Under the new arrangement, the earnings contribution flowing to Circle and Coinbase from USDC reserve income is expected to decline.
- 4JPMorgan did not disclose specific forecasted figures in the available reporting, but the downward revision signals material enough shifts in revenue assumptions to warrant updated guidance to institutional investors tracking both companies.
- 5## Market Context USdc reserve income has been a meaningful revenue source for Circle and, through its staking and integration partnerships, for Coinbase as well.
The Revised Agreement
JPMorgan analysts issued a research note lowering earnings forecasts for both Circle and Coinbase after Hyperliquid and Circle agreed to new terms for USDC revenue sharing. The revised agreement changes how income generated from USDC's reserve assets will be allocated among the parties involved in the stablecoin's ecosystem.
Impact on Revenue Streams
Under the new arrangement, the earnings contribution flowing to Circle and Coinbase from USDC reserve income is expected to decline. JPMorgan did not disclose specific forecasted figures in the available reporting, but the downward revision signals material enough shifts in revenue assumptions to warrant updated guidance to institutional investors tracking both companies.
Market Context
USdc reserve income has been a meaningful revenue source for Circle and, through its staking and integration partnerships, for Coinbase as well. Hyperliquid's prominence in perpetual futures trading has made the protocol an increasingly important distribution channel for USDC, giving it negotiating leverage in discussions over how reserve yields are shared across the ecosystem.
Why It Matters
For Traders
Coinbase and Circle equity traders should monitor Q4 guidance updates, as reserve income compression could pressure near-term earnings per share.
For Investors
USDC's reserve monetization model is more fragmented than previously assumed; changes to revenue splits among ecosystem partners reduce predictability of stablecoin economics.
For Builders
Stablecoin protocols integrating with major trading venues should expect revenue-sharing negotiations to tighten as venues gain distribution power.
