The issuer of the USDC stablecoin, Circle, may face significant pressure if the Fed reduces the key interest rate following its September meeting. This conclusion was shared by Dragonfly investor known by the pseudonym Omar.
This will play out in the months ahead, but interest rate cuts are horrendous for rate sensitive names like Circle
— A 100bps cut slashes run rate gross revenue by $618m (-23%), gross profit $303m (-30%), and margins 3.3%
— Valuation wise, takes an expensive stock trading at 42x… https://t.co/7lbPYUdfK3 pic.twitter.com/FspLbdUD8N— Omar (@TheOneandOmsy) August 13, 2025
The company’s primary source of income is interest from U.S. Treasury bonds backing its stablecoin. A Fed rate cut would reduce the yield on these assets, directly impacting profits.
Nearly 93% of market participants anticipate a regulatory policy easing.
The expert estimates that a 100 basis point rate cut would reduce Circle’s annual revenue by $618 million and gross profit by $303 million.
The reduction would also increase the company’s stock price by 50% despite lower profits. To offset losses, the issuer would need to increase USDC issuance by $28 billion—44% of the current $64 billion volume.
An analyst known as MartyParty suggested that Circle announced the launch of its own blockchain, Arc, as part of preparations for a potential profit decline. This would allow the issuer to “monetize transactions.” The company’s stablecoin operates on networks of other crypto projects like Ethereum and TRON, which receive the transaction fees instead of Circle.
The firm also announced the launch of the Circle Payments Network (CPN).
On August 15, it was revealed that the issuer will release 10 million shares on the secondary market at $130 per share—four times more than during the IPO in June, according to CoinDesk.
In July, Circle applied for a trust bank license in the U.S.