USDC reserve-yield split: JPMorgan cuts Circle & Coinbase earnings

Published: 2026-07-15 10:28:49 |

JPMorgan cut earnings forecasts for Circle and Coinbase after a reported Hyperliquid deal changed how USDC reserve yields are shared. The bank warns the new setup could weaken USDC economics across major trading venues. Under the new terms, Coinbase is reportedly set to pay Hyperliquid 90% of USDC reserve-generated income on the Hyperliquid platform, versus a more even revenue split previously. JPMorgan said this creates a “prisoner’s dilemma,” increasing pressure on the portion of revenue retained by Circle and Coinbase. JPMorgan estimates Hyperliquid holds about $6B of USDC (around 8% of circulating supply), giving it leverage in stablecoin revenue negotiations. The downgrade links lower expected USDC-related income to the reserve-yield distribution change, alongside weaker crypto trading volumes and asset prices. Traders may watch USDC balances on key venues and track any shift in reserve-yield sharing, as it can affect stablecoin supply flows, liquidity incentives, and how the market prices the durability of USDC-linked earnings for Circle and Coinbase.

Bearish

The news is bearish for USDC. JPMorgan’s core concern is that the Hyperliquid arrangement redirects most USDC reserve-yield income (reportedly 90%) away from the broader issuer economics toward a single large venue. Even if yields still exist, changing the revenue-retention structure can reduce incentives and dampen expectations for USDC-linked earnings durability, especially across multiple major trading venues. In the short term, this can pressure sentiment around USDC because traders may expect weaker issuer/venue incentives to support balances and liquidity. In the longer term, if the “prisoner’s dilemma” logic drives more fragmented cooperation, USDC’s distribution incentives could become less aligned with overall supply growth, keeping a ceiling on bullish narratives. While higher interest rates could partially offset yield pressure over time, the downgrade specifically highlights near-to-medium term headwinds.