Circle pays millions for Binance distribution while its margins collapse

Circle Injects $100 Million into Binance Partnership to Amplify USDC Distribution, Yet Margins Under Pressure

Circle is doubling down on Binance after USD Coin (USDC) stablecoin customer balances on the exchange nearly quintupled since their first agreement.

On Sept. 22, the companies announced a new five-year commercial agreement alongside Binance’s $100 million equity investment in Circle, extending a relationship that has turned the world’s largest crypto exchange into one of USDC’s most important distribution channels.

The agreement focuses on expanding USDC access, particularly in emerging markets, and replaces arrangements signed in November 2024 and August 2025.

Binance bought 1.237 million Circle Class A shares at $80.84 each, a 5% discount to Circle’s Sept. 17 closing price, and agreed to a two-year restriction on selling, pledging, or hedging the shares. The commercial agreement runs through September 2031, although either company can terminate it earlier under specified circumstances.

The longer commitment follows a sharp expansion in USDC’s presence on Binance. Customers held about $1.5 billion of USDC on Oct. 1, 2024, shortly before Circle entered into its original Binance agreement in November.

Binance’s latest Sept. 1 Proof-of-Reserves snapshot shows customer USDC balances at about $7.1 billion, up roughly 376%, or almost fivefold.

USDC itself has not grown nearly as quickly. Circle reported $39.7 billion of USDC in circulation on Nov. 29, 2024, around the time it struck the first Binance agreement. DeFiLlama currently puts circulating USDC at roughly $74.4 billion, up about 87%.

That means Binance customer balances have grown from the equivalent of less than 4% of global USDC supply at the start of the partnership to almost 10% today.

USDC closes part of Tether’s Binance lead

USDC’s expansion on Binance has also substantially outpaced Tether’s growth on the platform.

Binance customers held $21.4 billion of USDT in the Oct. 1, 2024 reserve snapshot, compared with $1.5 billion of USDC. That left roughly $14.30 of USDT on Binance for every dollar of USDC.

By Sept. 1 this year, customer USDT balances had risen to $32.3 billion, while USDC reached about $7.1 billion. The ratio had narrowed to approximately 4.5-to-1. USDT customer balances increased about 51% over the period, compared with USDC’s roughly 376% increase.

USDC balances on Binance grew 376%, shrinking USDT’s lead from 14.3-to-1 to 4.5-to-1 despite USDT remaining dominant.

Circle has paid heavily for that distribution

The growth on Binance has come at a high cost, leaving the economics behind the renewed partnership as the bigger unanswered question.

Under the November 2024 agreement, Circle paid Binance a $60.25 million upfront fee and agreed to monthly incentive payments based on USDC held on the platform and in Binance’s treasury.

Those payments ranged from an annualized mid‑double‑digit to high‑double‑digit percentage of a fixed rate reset quarterly at a discount to three‑month SOFR. Binance also agreed, subject to certain exceptions, to keep $3 billion of USDC in its treasury, with treasury incentive payments requiring at least $1.5 billion to remain there.

The expansion on Binance has also stressed Circle’s profitability. In Q2, the company generated about $668 million of reserve income while reporting roughly $410 million in distribution and transaction costs, equivalent to about 61% of reserve income. Non‑Coinbase distribution costs increased as activity expanded across new and existing partnerships.

Binance was already a significant contributor to that bill. Circle said distribution costs specifically tied to Binance rose by $152.1 million in 2025 as the relationship deepened.

Binance becomes a shareholders

The latest agreement reshapes the relationship by making Binance an investor in the stablecoin issuer it distributes.

The $100 million investment endsow an equity stake in Circle while preserving the balance‑linked incentive structure. Analysts compared the arrangement with Circle’s distributor‑shareholder linkage with Coinbase, though Binance’s approximate 0.5% stake is modestly smaller.

Meanwhile, Binance chief executive Richard Teng framed the investment as a long‑term commitment to the stablecoin. He noted:

«“Trust in this industry is earned through regulation, transparency, and delivery. Today, in recognition of all three, Binance commits $100M to Circle and extends our partnership for five years. This partnership is about bringing a stable, reliable digital dollar within reach of anyone with a phone.”

The next scrutiny will focus on the actual balances and costs behind these ambitions. Independent monitors plan to track reported Binance USDC holdings and Circle’s non‑Coinbase distribution expenses once third‑quarter results are published.

With Binance customers now totaling more than $7 billion in USDC, detailed disclosures could reveal the true price Circle pays to sustain a distribution channel that ballooned from under 4% of global USDC supply to nearly 10% within two years.

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