How to see through crypto stocks from both stock investment and cryptocurrency perspectives in one article! Does Circle have the potential to become the next VISA/Swift? This article provides an in-depth analysis of Circle's prospects, especially helping traditional stock investors to better understand web3-related concepts.
How to see through crypto stocks from both stock investment and cryptocurrency perspectives in one article! Does Circle have the potential to become the next VISA/Swift? This article provides an in-depth analysis of Circle's prospects, especially helping traditional stock investors to better understand web3-related concepts.
Author: AstrSource: X， ... What I find truly remarkable about Circle's financial report is not just the better-than-expected EPS or the continued growth in USDC circulation, but rather its redefinition of Circle's identity: it may not simply be a "stablecoin issuer that profits from government bond interest," but rather a financial infrastructure company that is leaping from a "digital dollar issuance layer" to a "global programmable payment and settlement network." This is why Circle has the core potential to grow into a company with a market capitalization of hundreds of billions over the next 5-10 years. Looking at the latest Q1 2026 financial report, Circle's core data is very strong: total quarterly revenue and reserve income were $694 million, a year-on-year increase of 20%; adjusted EBITDA was $151 million, a year-on-year increase of 24%; USDC circulating supply at the end of the quarter reached $77 billion, a year-on-year increase of 28%; and USDC on-chain transaction volume reached $21.5 trillion, a year-on-year increase of 263%. The company also disclosed that Arc completed a $222 million token pre-sale, corresponding to a fully diluted network valuation of $3 billion. Investors included top institutions such as a16z crypto, Apollo, ARK Invest, BlackRock, Bullish, General Catalyst, Haun Ventures, ICE, Janus Henderson, Marshall Wace, and Standard Chartered Ventures. In the short term, Circle remains a highly profitable "digital dollar reserve yield company." In the long term, Circle is attempting to become the operating system of the on-chain dollar system, combining products such as USDC, CCTP, CPN, Arc, AI Agent payments, and USYC into a complete global settlement network. My core judgment: Circle is quite close to becoming a company with a market capitalization of hundreds of billions of dollars. To grow into a trillion-dollar company, it needs to break through in Arc, AI payments, institutional settlement networks, and global market share of USDC. From a 10-year perspective, this is not impossible. I. What exactly has Circle changed? Not just the payment front-end, but the underlying settlement mechanism. Many people discuss Circle and easily see it as a "crypto version of PayPal" or a "stablecoin version of a bank." This understanding is too narrow. Circle has begun to change the underlying logic of payments and settlements. The core problem of the traditional payment system is that while the front-end appears real-time, the back-end is not. When users swipe their cards, transfer funds, or make cross-border payments, the interface may immediately display a success message, but behind the scenes, it typically involves multiple layers of processes, including bank clearing, card organization authorization, batch settlement, corresponding accounts, foreign exchange conversion, anti-fraud, and compliance review. Its advantages are maturity, stability, and strong consumer protection; its disadvantages are slow cross-border transactions, high costs, numerous participants, and long settlement chains. The efficiency advantages of stablecoins and blockchain payments lie in the fact that assets can be transferred 24/7 on open networks, settlement can be completed near real-time, and they are programmable. USDC's significance is not merely that of a "dollar token," but that it transforms the US dollar into an asset that can circulate at the internet protocol layer. This is Circle's first-principles value: it transforms the US dollar from part of the banking ledger system into a native settlement asset within the internet financial network. Arc's positioning further reinforces this point. According to Circle's disclosure of Arc, Arc is an EVM-compatible Layer 1 platform for stablecoin finance, featuring USDC as gas, low and predictable fees, deterministic finality in under 1 second, configurable privacy, and targeting payment, foreign exchange, lending, capital markets, and institutional settlement scenarios. This means Circle's ambition goes beyond simply "issuing USDC"; it aims to integrate USDC issuance, cross-chain transfer, wallets, payments, settlement, institutional interfaces, and the developer ecosystem into a new financial infrastructure. If Visa and Mastercard represent the networks of the consumer payment era, and SWIFT the network of the interbank messaging era, then Circle aims to create a value transfer and settlement network for the stablecoin era (encompassing both consumer and large-value clearing and settlement). It's important to note that Circle hasn't yet truly broken the monopoly of Visa, Mastercard, and SWIFT. Currently, it's more like standing on the early high ground of a new settlement paradigm. Whether it can grow from a "crypto financial infrastructure" to a "global financial infrastructure" still needs 5-10 years to prove. II. How to interpret the financial report? Strength lies in the quality of growth, not just simple revenue figures. This financial report requires special attention to several core operating indicators. In Q1 2026, USDC's circulating supply at the end of the quarter was $77 billion, a year-on-year increase of 28%; the average circulating supply was $75.2 billion; USDC on-chain transaction volume was $21.5 trillion, a year-on-year increase of 263%; Meaningful Wallets reached 7.2 million, a year-on-year increase of 47%; and USDC on-platform balance reached $13.7 billion, a year-on-year increase of 254%. Three things to clarify: First, the usage of USDC is still growing, and this isn't a post-IPO narrative overextension. Second, Circle's ecosystem is gradually transitioning from "distribution through channels like Coinbase" to "accumulation through its own platform and institutional network." The significant increase in USDC on-platform balances is important for Circle because it affects the retention and revenue sharing structure of reserve income. Third, the surge in on-chain transaction volume represents increased network activity, but this metric cannot be simply equated with Visa's payment volume. Circle itself indicated in its financial report that a large portion of the Q1 increase in on-chain transaction volume came from market-making and repricing activities on Aerodrome. Therefore, the $21.5 trillion in on-chain transaction volume is an indicator of network activity, but it cannot be directly compared to Visa's actual consumer payment volume. From a financial perspective, Circle remains highly dependent on reserve revenue. In Q1 2026, reserve revenue was $652.5 million, accounting for the vast majority of total revenue and reserve revenue of $694.1 million; other revenue was $41.6 million, showing significant year-on-year growth, but its size remains relatively small. Circle's core business remains "USDC circulation size × reserve yield × revenue retention rate," but the company is using products such as Arc, CPN, CCTP, Agent Stack, and USYC to attempt to upgrade itself from an interest rate-sensitive company to a network-based company. In the short term, the growth potential is good, but it's impossible to push Circle to a market capitalization of 100 billion. More importantly, we need to focus on the speed of Circle's ecosystem construction and implementation. Third, is Circle currently "going long on US Treasury yields"? Not entirely. Circle's revenue largely comes from the returns generated by its USDC reserve assets. The company discloses that USDC is 100% backed by cash and cash equivalents, primarily including short-term US Treasury bonds in the Circle Reserve Fund, overnight US Treasury bond repurchase agreements, and bank cash. Circle's 2025 annual report also discloses that reserve income accounted for 96.0% and 99.1% of total revenue in 2025 and 2024, respectively. From a financial perspective, Circle currently resembles a hybrid of a "digital dollar money market fund + payment network." The larger the circulation of USDC, the higher the short-term dollar interest rate, and the higher its reserve income. Here's a very easily confused point: Circle isn't simply "going long on long-term US Treasury prices," but rather is closer to "going long on short-term dollar liquidity and short-term interest rate yields." If the next Federal Reserve chairman is dovish, doesn't raise interest rates, or even pushes for rate cuts, then short-term Treasury yields may decline, putting pressure on Circle's unit reserve yield. Circle itself also disclosed in its annual report that lower interest rates reduce reserve income, while higher interest rates increase reserve income. The company also provided a sensitivity analysis: based on an average yield of 3.64% in December 2025, a 100 basis point increase in interest rates would increase reserve income by approximately $756 million; a 100 basis point decrease would decrease reserve income by approximately $756 million. Currently, less discussed in the market is that low interest rates are not entirely negative. Low interest rates may increase the appetite for risky assets, driving the expansion of crypto asset trading, on-chain financial activities, and stablecoin use cases; if the growth rate of USDC circulation can offset the decline in reserve yields, then Circle's total reserve income may still maintain growth. Conversely, if inflation rises and short-term interest rates remain high for a long period, Circle's reserve yields will benefit; however, high interest rates may also suppress the valuation of risky assets and make regulators more concerned about whether stablecoin issuers are "overly reliant on reserve spreads." Circle's interest rate logic cannot be simply understood as "interest rate hikes are good, interest rate cuts are bad." High interest rates benefit short-term profits, while low interest rates test the upgrade of the business model. What truly determines Circle's long-term valuation is not one or two future FOMC resolutions, but whether it can expand its revenue from "reserve interest" to "payments, settlements, developer tools, cross-chain transactions, tokenized assets, AI payments, and network fees." IV. Why could AI payments become a huge incremental factor for Circle? AI Agent payments are one of Circle's most noteworthy long-term directions. If AI Agents truly transform from "chat tools" into "autonomous digital labor," they will need payment capabilities. Agents need to purchase APIs, invoke models, pay data, invoke services, purchase computing resources, settle micro-tasks, and pay other agents. Traditional credit cards and bank transfers are not suitable for this high-frequency, small-amount, automated, cross-border, machine-to-machine payment scenario. AI Agent payments require several characteristics: First, low cost. Many transaction amounts may be as low as a few cents or even lower. Second, real-time. Agents cannot wait for traditional bank settlement cycles. Third, global availability. AI services and data markets are inherently cross-border. Fourth, programmability. Payments must be integrated with identity, permissions, risk control, task execution, and contract triggering. Fifth, machine-readable. AI agents cannot rely on human manual confirmation of every transaction. If USDC + the low-cost Arc network can truly close this narrative loop. Circle launched its Agent Stack in Q1 2026, including Circle CLI, Agent Wallets, Agent Marketplace, and Nanopayments. The company disclosed that Nanopayments can support gas-free USDC transfers as low as $0.000001 for high-frequency, small-amount, machine-to-machine transactions. Circle also disclosed that x402 processed $24.24 million in transactions in the 30 days ending April 29, 2026, of which 99.8% were settled in USDC. This data is still very early, and it's too early to say that "AI payments have exploded." However, it does suggest that USDC is very likely to become one of the native payment currencies in the AI Agent economy. If AI Agent transaction volume truly grows exponentially in the future, then traditional payment networks may not be suitable for handling large amounts of sub-cent, cross-border, and automated payments. Credit card networks excel in consumer payments, dispute resolution, credit systems, and merchant acceptance, but they are not designed for the massive amounts of micro-payments per second between machines. Stablecoins are naturally suited for this scenario. Fifth, Arc is a key step for Circle from "issuer" to "settlement network." The importance of Arc lies not in the fact that it has issued another token, but in its potential to change Circle's revenue structure and strategic position. The business model of stablecoin issuers is essentially seen by the market as a "spread business": users exchange USD for USDC, Circle earns interest on reserve assets, and then shares the profits with distribution channels. This model is very profitable, but its valuation ceiling is easily limited by three things: interest rate cycles, regulatory policies, and channel revenue sharing. Arc attempts to solve this problem. According to Arc's official documentation and white paper, it is a native Layer 1 stablecoin, emphasizing low and predictable fees, USDC-denominated gas, less than 1-second deterministic finality, EVM compatibility, privacy configuration, institutional validators, and native integration with the Circle product stack. The Arc white paper also shows that the Arc mainnet launch target is the summer of 2026, and the ARC token will be used for network functions such as staking, governance, fee conversion, and validator incentives. This means that if Arc succeeds, Circle could evolve from a "USDC issuer" to a "USDC settlement network operator." Issuers earn reserve revenue. Networks earn revenue from trading, liquidity, ecosystem, developers, institutional access, and standards setting. If Arc can become the core infrastructure for institutional stablecoin payments, RWA settlements, AI Agent payments, cross-border B2B payments, on-chain foreign exchange, and tokenized capital markets, then Circle's valuation logic will upgrade from an "interest rate cycle stock" to a "financial network stock." Arc is still in its early stages. Its testnet data is impressive, institutional backing is strong, and the Arc token presale received top-tier capital support. However, the mainnet, real trading volume, fee revenue, developer ecosystem, regulatory acceptance, and institutional settlement migration all still need verification, which is currently one of the key points for bullish investors on Circle. For CRCL shareholders, it's important to note that due to the existence of blockchain tokens, Arc's success does not necessarily equate to a 100% increase in CRCL equity value. Value may be partially realized within the Circle ecosystem, partially within the ARC token, partially within the USDC network effect, and partially within the partner and developer ecosystem. Regardless, if Arc succeeds, it will be a huge boon to CRCL. Sixth, can Circle break the monopoly of Visa, Mastercard, and SWIFT? I believe the answer is not "immediate replacement," but rather "reconstruction starting from specific scenarios." Visa's payment volume in fiscal year 2025 was $14.2 trillion, processing 257.5 billion transactions and issuing 4.9 billion payment credentials; currently, Visa's market capitalization is approximately $660 billion, and Mastercard's is approximately $440 billion. The traditional payment networks have very deep moats: merchant networks, consumer habits, dispute resolution, anti-fraud, credit systems, bank relationships, brand trust, and compliance architecture—none of which can be immediately replaced by a single blockchain. SWIFT is not simply a "slow payment network." It is a global interbank messaging and standards network, connected to the banking system, regulatory system, and cross-border compliance network. Circle and Arc can change the settlement layer, but completely replacing SWIFT's institutional network is extremely difficult. Circle is most likely to first break through not everyday card transactions, but the following scenarios: Cross-border B2B payments, especially international payments for SMEs. On-chain transactions and crypto-financial settlements. Institutional fund allocation and corporate treasury management. Instant settlement of tokenized money market funds, bonds, and RWA. AI Agent micropayments and machine-to-machine payments. Digital USD payments in regions with high inflation or low banking efficiency. In these scenarios, traditional payment networks experience higher friction, making stablecoins more advantageous. Circle's CPN already reflects this direction. The company disclosed that Circle Payments Network's annualized total payment volume reached $8.3 billion, with 136 financial institutions joining, supporting local fiat currency payments in over 50 countries and stablecoin payments in over 180 countries. However, it must be noted that the $8.3 billion annualized TPV is still very small compared to Visa's $14.2 trillion in payment volume. Nevertheless, based on the above data and optimistic estimates of the scenarios, Circle is likely to become an "important alternative layer to the global settlement network" within 5–10 years. VII. Can Circle break free from its dependence on Coinbase and Treasury bond interest? Circle has a very deep partnership with Coinbase. Circle's annual report discloses that Coinbase supports the use of USDC, and Circle pays Coinbase a share of USDC reserve revenue; in 2025 and 2024, Circle's distribution costs under Coinbase-related agreements were $1.4 billion and $924.5 million, respectively. This means that while Circle is the issuer of USDC, the distribution, ecosystem, and user reach of USDC have historically relied heavily on core channels like Coinbase. Strong channels compress the issuer's profit margins. Therefore, Circle's diversification strategy is essential. Currently, the company is doing the following: First, increasing the proportion of USDC on-platform transactions, keeping more USDC within Circle's own platform and institutional client system. Second, developing CPN, extending Circle's reach beyond USDC issuance to enterprise and institutional payment networks. Third, developing Arc, giving Circle a native stablecoin settlement network instead of relying solely on other public chains. Fourth, develop the Agent Stack to secure a developer gateway before the AI payment boom. Fifth, develop USYC, Gateway, CCTP, foreign exchange, RWA, and developer services to increase the proportion of non-reserve revenue. Some early signs: In Q1 2026, Circle's other revenue reached $41.6 million, roughly doubling year-over-year; USDC on-platform balance increased by 254% year-over-year; the company's guidance for other revenue in 2026 is $150 million to $170 million; CPN, Managed Payments, Agent Stack, and Arc are all expanding. Objectively speaking, it's too early to say that Circle has broken free from its dependence. Reserve revenue still accounts for the vast majority, while other revenue remains small. Arc's mainnet is not yet mature, AI payments are still in their early stages, and the CPN's scale is still very small compared to traditional payment networks. If you need to invest in Circle long-term, here are the metrics you should pay attention to: Can the proportion of other revenue to total revenue increase from single digits to 10%, 20%, or even higher? Can the RLDC margin remain stable at 38%–40% or higher in the long term? Can the proportion of USDC on-platform continue to increase? Can the annualized TPV of the CPN increase from billions of dollars to hundreds of billions of dollars? Will there be real institutional settlement volume after Arc's mainnet launch, and not just testnet transactions? Will AI Agent payments evolve from a concept into sustained transaction volume and fee revenue? If these indicators materialize, Circle can be upgraded to a "global financial network stock." VIII. In 5-10 years, how likely is it that Circle will become a giant with a market capitalization of hundreds of billions or even trillions? Based on CRCL's latest share price of approximately $131.76 and the share capital data disclosed in Q1 2026, a rough estimate suggests that Circle's current diluted market capitalization is around $35 billion. In other words, a market capitalization of $100 billion requires approximately a 3-fold increase; a market capitalization of $1 trillion requires a 28-30 fold increase. Circle management's long-term through-cycle guidance for USDC circulation is a 40% CAGR. This figure is quite aggressive, demonstrating management's current confidence. Optimistically, if the $77 billion USDC circulation grows at a 40% CAGR, it will be approximately $414 billion in 5 years and approximately $2.2 trillion in 10 years. Currently, the global stablecoin market is approximately $320 billion, with USDC at approximately $78 billion, and USDT still holding the largest share. Bear Market Scenario: Circle is merely an interest rate-sensitive stablecoin issuer. If stablecoin regulation tightens in the future, and USDC's market share is squeezed by USDT, bank stablecoins, PayPal, Visa, banking consortia, or central bank digital currencies; if short-term interest rates decline, leading to a decrease in reserve yields; if channel revenue sharing by Coinbase and others continues to compress profits; and if Arc and CPN fail to form a genuine network effect, then Circle's valuation may remain in the $20 billion to $50 billion range for an extended period, or even lower during a bear market for risk assets. In this scenario, Circle is a decent fintech company, but not a super-network company. Baseline Scenario: Circle Becomes One of the Core Infrastructures in the Stablecoin Era. If the global stablecoin market grows from approximately $320 billion to $1 trillion to $2 trillion within 5–10 years, and USDC maintains a 25%–35% share, then the circulating supply of USDC could reach $250 billion to $700 billion. Even if short-term interest rates decline, as long as the circulating supply grows rapidly enough, reserve income will still be considerable. Simultaneously, if businesses such as CPN, Agent Stack, CCTP, Arc, and USYC significantly boost other revenue streams, Circle's valuation logic may shift from a "spread financial stock" to a "financial network infrastructure stock." In this scenario, it's entirely possible for Circle to reach a market capitalization of hundreds of billions of dollars. A market capitalization of hundreds of billions of dollars doesn't require it to replace Visa or SWIFT, but only to become one of the main standards for stablecoin payments and on-chain settlements. Bull Market Scenario: Circle Becomes the Settlement Layer for Internet Finance. If USDC becomes the core digital dollar for global enterprises, AI agents, RWA, on-chain capital markets, cross-border payments, and institutional treasury; if Arc becomes the mainstream settlement network for stablecoin finance; if CPN becomes the de facto standard for banks and financial institutions to access stablecoin payments; and if other revenue and network fees begin to become core profits, then Circle's valuation ceiling will expand significantly. In this scenario, Circle could continue to move from the hundreds of billions of dollars level towards $300 billion, $500 billion, or even higher. But a trillion-dollar market capitalization requires even more stringent conditions. Circle cannot simply have a few hundred billion dollars in USDC circulation. It must become a hybrid of Visa, Mastercard, SWIFT, money market funds, on-chain settlement networks, and AI payment networks, and be able to convert its network size into high-profit, high-retention, and high-moat cash flow. Specifically, it needs to meet several conditions: USDC circulation reaches the level of one to two trillion dollars. At least one of Arc or CPN becomes a global-level settlement network. AI agent payments and machine payments become a real, large market. Circle's non-reserve revenue ratio increases significantly. The regulatory environment allows the stablecoin system to continue expanding. USDC maintains a leading market share among compliant USD stablecoins. Circle can reduce its reliance on profit sharing from channels like Coinbase. The value distribution between the ARC token and CRCL equity does not harm shareholder interests. The following is an analysis of Circle's prospects over 5-10 years: Becoming a company with a market capitalization of hundreds of billions of dollars: Medium to high probability, approximately 40%–60%. Becoming a company with a market capitalization of $300 billion to $500 billion: Low to medium probability, approximately 15%–30%. Becoming a company with a market capitalization of $1 trillion: Low probability but not zero, approximately 5%–12%. Additionally, it's worth noting that with Circle currently trading at $130 but the settlement network not yet being implemented, it may be slightly overpriced compared to its fundamentals. A growth stock premium could be justified, but a better approach would be to sell put options or wait and see.
Anais
Weatherly
Catherine
Kikyo
Joy