Circle to Release Q1 Financial Results
USDC stablecoin issuer Circle plans to publish its Q1 financial report on May 11 before the US stock market opens. Revenue forecast is approximately $715 million, up 11% year-over-year but 7% below the record revenue of the previous quarter.
A Critical Week for Circle: How the Q1 Report Becomes a Bargaining Chip in the New Financial Architecture
When a company with a market cap of nearly $30 billion and a forward P/E above 111 reports earnings amid a simultaneous change of Fed leadership and a vote on a landmark bill, this is not a quarterly report—it's a moment of truth. Circle Internet Group approaches May 11, 2026, at a point of maximum pressure and maximum opportunity in its public history. And the $715 million revenue figure is just the top layer of a much deeper tectonic shift.
What's Really Happening
Circle will release its Q1 2026 report before the market opens on Monday. The consensus revenue forecast is $715 million, up 11% from $579 million a year earlier but 7% below the record $770 million in Q4 2025. EPS is expected in the range of $0.15–$0.19, which looks like a catastrophic drop from $0.43 in the previous quarter.
However, calling this a decline means misunderstanding how Circle's business works. The company doesn't earn from transactions but from interest on reserves. 95% of its revenue comes from interest on US Treasury bonds in which USDC reserves are invested. The Fed funds rate is at 3.5–3.75%, and three-month Treasury bills yield about 3.61%. Every Fed rate move and every yield percentage point directly impacts Circle's revenue.
But there's a subtler point. The market isn't looking at absolute numbers but at answers to three key questions that CEO Jeremy Allaire must address during the investor call:
- The Coinbase contract. The 2023 agreement, under which Coinbase receives 100% of interest income from USDC on its platform and 50% from USDC off-platform, expires in August 2026. Coinbase's CFO stated last week that the contract "renews every three years unchanged." For Circle, this is a negative scenario, but pressure on Coinbase after a quarterly loss of $394 million may give Circle leverage to renegotiate terms.
- Non-interest income. Payments, corporate services, and on-chain services represent a second, still immature business line. Partnerships with Meta for creator payouts and expansion into Africa and Asia have been announced, but monetization remains unclear.
- USDC in circulation. As of early May, it reached $78.1 billion, up from $75.3 billion at the end of Q4. This fundamental metric reflects both demand for the stablecoin and future interest income.
Timeline and Context
Let's reconstruct the chain of events leading to today.
July 14, 2025. The House passes the CLARITY Act (Digital Asset Market Transparency Act) with a vote of 294–134. The bill establishes a federal regulatory framework for digital assets and divides authority between the SEC and CFTC. It then stalls in the Senate—key sticking point: a ban on passive interest income for stablecoin holders.
Winter 2025–2026. Negotiations reach an impasse. Coinbase temporarily withdraws from discussions. Banks lobby for a yield ban; the crypto industry resists.
April 2026. Breakthrough: Senators Tom Tillis (Republican) and Angela Alsobrooks (Democrat) reach a compromise. The amendment bans passive yield for "static" stablecoins but allows rewards for "active" ones—those used in trading, transactions, and staking.
May 4, 2026. Circle shares surge nearly 20% on the compromise news, closing at $113.67 on Friday.
May 11. Earnings report. May 14. Key vote in the Senate Banking Committee. May 15. Fed leadership change: Jerome Powell leaves, Kevin Warsh takes office.
Three events in five days—not a coincidence but a concentration of catalysts.
Who Wins and Who Loses
Primary beneficiary—Circle itself, if the CLARITY Act passes the committee vote. Removing regulatory uncertainty opens the door for institutional adoption of USDC. Polymarket estimates a 76% probability of the law passing in 2026.
Secondary beneficiary—Kevin Warsh. And here begins the least obvious narrative. Warsh is the first Fed chair in history to own cryptocurrency. He advocates for Fed oversight of private stablecoins as "shadow dollars" while opposing a CBDC (digital dollar), arguing that if confidence in the dollar weakens, the digital dollar will fall with it. For Circle, Fed oversight is not a threat but legitimization.
Loser—Tether. Amid the CLARITY Act compromise, pressure on unregulated stablecoins intensifies. USDC has already gained market share: according to Mizuho, adjusted USDC transaction volume in 2026 reached $2.2 trillion versus $1.3 trillion for USDT—a 64% market share for Circle. USDC supply grew by about $2 billion in Q1, while USDT shrank by about $3 billion.
Secondary loser—traditional banks. If stablecoins gain a federal regulatory framework, their competition with bank deposits becomes direct and open.
What the Media Misses
Insight one: Warsh as architect of a new dollar system. Everyone discusses his approach to rates (quantitative tightening to fight inflation plus rate cuts to support the real economy). But no one talks about his strategic vision: private stablecoins under Fed oversight as a tool for global dollar dominance. In this scenario, Circle becomes not just a stablecoin issuer but a quasi-state infrastructure player. It's no coincidence that Circle's report and Warsh's inauguration converge this week.
Insight two: The Coinbase deal will be renegotiated despite public statements. Coinbase's CFO can talk about the contract being "unchanged" as much as she wants, but reality is: Coinbase just reported a loss and depends on USDC interest income as a critical revenue source. Circle knows this and will push for better terms. The August expiration coincides with likely CLARITY Act passage—perfect timing for a renegotiation.
Insight three: Circle's market cap does not reflect the regulatory option. At a market cap of $29.5 billion and forward P/E of 111, the company trades as if the CLARITY Act is already passed and non-interest income has already materialized. But shares are still 62% below the all-time high of $298.99. The market is pricing in a regulatory failure—creating an asymmetric opportunity.
Forecast: Next 30 and 90 Days
30-day horizon, through mid-June 2026.
Optimistic scenario: CLARITY Act passes the banking committee on May 14. Circle shares surge above $140, testing Wells Fargo's price target of $142. Negotiations with Coinbase tilt in Circle's favor due to regulatory momentum. Warsh publicly supports oversight of private stablecoins.
Pessimistic scenario: The bill stalls again due to disagreements over DeFi and ethics provisions related to the Trump family. Shares fall back to $90–100. The Coinbase contract renews on existing terms, pressuring margins.
90-day horizon, through August 2026.
Key moment: expiration of the Coinbase contract. If the CLARITY Act is passed, Circle gets a double boost: regulatory legitimacy and a new, more favorable Coinbase contract. In this scenario, shares could reach $180–200 by autumn.
If the law stalls in the Senate and Coinbase holds firm on current terms, Circle faces a tough spot: growth slows, interest income declines as the Fed cuts rates, and non-interest income is still immature. Shares could fall below $80.
But there is a third scenario, which I consider the base case: the CLARITY Act passes in a compromise form, the Coinbase contract is renegotiated with a slight improvement for Circle, and Warsh creates a favorable rhetorical environment. In this case, EPS stabilizes at $0.25–$0.35 per quarter, and by year-end shares reasonably trade in the $130–160 range.
The key takeaway from Circle's May 11 report: the $715 million revenue and $0.18 EPS figures are not what the market will react to. It will react to Jeremy Allaire's words about the Coinbase contract. One sentence on the investor call can move shares more than the entire quarterly report.
— Editorial Team
