Not an investment, but a monthly rent collection: Another account of Binance’s US$100 million investment in Circle

Author: Gu Yu, ChainCatcher On the evening of September 22, Circle’s 8-K filing with the SEC revealed a large transaction: Binance purchased 1,237,011 Class A common shares of Circle at a price of $80.84 per share, for a total amount of $100 million. The transaction was completed on September 17. The same document also disclosed that the two parties signed a new five-year commercial agreement to replace the old agreement in November 2024 and August 2025 - Binance will promote USDC on the platform, and Circle will pay Binance a monthly incentive fee based on USDC holdings. But the market's first reaction was not positive. On the day of the news, CRCL fell to $93 after a brief surge, down about 1% from the previous day's closing price. The coldness makes sense. Because this is not a $100 million deal, this is a "shelf" deal. Discount, lock-in, strings attached: an unusual equity stake Almost every clause of this investment emphasizes "long-term". Calculated based on CRCL's closing price of $85.09 on September 17, the price of $80.84 is equivalent to a discount of approximately 5%; if measured based on the closing price of $94.49 on September 21, the discount range expands to approximately 14%. Binance promises not to sell, transfer, pledge or hedge these shares for up to two years after delivery, except in the case of related party transfers, board-approved acquisitions or legally mandated disposals; during the lock-up period, the voting rights belong to Binance. In other words, what Binance got was an equity that "can't leave as long as the cooperation is still there" - if the relevant business arrangements are terminated early as agreed, the transfer restrictions will also be lifted. Equity is collateral for a commercial agreement, not an independent investment. The real focus is on the protocol itself. According to the 8-K, Circle pays Binance a monthly incentive fee based on “the amount of USDC held through Circle’s modular smart contract wallet infrastructure services” at an undisclosed rate. This is consistent with the structure of the protocol version in August 2025; in the first version of the protocol in November 2024, Circle paid Binance a one-time upfront fee of approximately US$60.3 million. Circle’s 2025 annual report disclosed that Binance-related distribution costs increased by $152.1 million that year. Within 22 months, the agreement between the same partners was rewritten three times. The distribution price of stablecoins is being repeatedly repriced. Who is giving money to whom The public narrative puts Binance’s investments at the forefront, but the direction of capital flow is in the opposite direction. From an accounting perspective, Binance is a shareholder; from a cash flow perspective, Binance is a payee. While Circle pays promotion fees to Binance, it also makes Binance its shareholder. This structure has precedent for Coinbase - as a co-founder of USDC, Coinbase has always taken half of the interest on USDC reserves. The weight of distribution costs is better illustrated by numbers. Circle’s total revenue and reserve income in the second quarter was US$701 million, a year-on-year increase of 7%; distribution and transaction costs were US$410.4 million, of which US$324.6 million went to Coinbase. Revenues before distribution costs (RLDC) were $289 million, a margin of 41.2%. Return on reserves fell to 3.5% over the same period, down 66 basis points year over year. This means that Circle’s profit formula is extremely fragile: Revenue = Circulation × Reserve Yield − Distribution Cost. The growth in circulation can be offset by falling interest rates, or it can be eaten up by channel sharing. Compass Point gave Circle a Neutral rating when it first covered it in June 2025, citing its high concentration of distribution partners among crypto-native institutions — and now there’s one more exchange to add to the list, and one that also sits on the shareholder table. Binance also has its own account here. This exchange launched BUSD with Paxos in 2019, which once pushed it to a market capitalization of US$20 billion. However, it was suspended by the New York State Department of Financial Services in February 2023, and has since turned to Hong Kong First Digital's FDUSD - the latter's circulation has now shrunk to about US$350 million. The failure of the own stablecoin route has made "promoting other people's dollars" a realistic option. USDC’s position: 2nd, but chassis is getting stiffer In terms of scale, USDC is still the second largest: USDT has a circulating supply of approximately US$183 billion, USDC has approximately US$75 billion, and the two together account for about 85% of the stablecoin market of approximately US$300 billion. But the structure is changing - a grouping chart released by Lorenzo Valente, director of digital asset research at ARK Invest, on September 9 shows that there were once four stablecoins with a market value of over US$10 billion. Now only Tether and Circle are left, with the third place stuck at US$6 billion. On Ethereum, the share gap between USDC and USDT has narrowed from 34.2 percentage points in November 2024 to 17.8 percentage points in September 2026 - USDT has grown 22% and USDC has grown 83% over the same period. In 2025, USDC’s adjusted on-chain transaction volume exceeded USDT for the first time, US$18.3 trillion versus US$13.3 trillion; in the second quarter, this figure reached US$14.8 trillion, a year-on-year increase of 151%. What’s more critical is retention. As of the end of the second quarter, USDC on Circle’s own platform reached $12.4 billion, a year-on-year increase of 106%, and the average daily weighted share rose to 19.5% from 7.4% in the same period last year. The more USDC remains in the scene controlled by Circle, the more the distribution bargaining power will tilt towards Circle. This is why the Binance agreement is billed based on the "USDC balance in the Circle wallet infrastructure" - Circle is using rate design to guide the increment to its own territory. And new growth is coming from the other side. Stock tokenization is the steepest curve this year: On September 10, Nasdaq announced that it planned to invest US$100 million in Kraken parent company Payward to promote tokenized stock infrastructure; on September 21, the European Central Bank launched Pontes to support wholesale tokenized asset transactions settled in central bank currency. For USDC, this is a new requirement that is locked by rules. Crypto KOL Kuai Dong commented: "The current Binance U.S. stock business, due to compliance, must use USDC to trade and exchange, so this has stimulated people's need to obtain the stable currency USDC first, and then buy and sell U.S. stocks. Although Binance provides one-click matching, for example, you can use the stable currency USDT and the platform currency BNB to place orders, but the final transaction path is to exchange it for the stable currency USDC and then match it with the U.S. stocks on the platform." In other words, every time a tokenized stock is traded, it creates a mandatory exchange demand for USDC. USDT and BNB are only entrance currencies on this path, and they will eventually have to pass through the gate of USDC. When stocks start to be listed on the chain, USDC is no longer just a trading medium, but the default pricing layer of this new pipeline. The product side is also increasing its investment. On September 16, Circle’s Layer 1 public chain Arc was launched on the public mainnet, with gas fees paid in USDC. The founding validators include BlackRock, Visa, Mastercard, DTCC, Intercontinental Exchange and Standard Chartered Bank; on July 10, the U.S. Office of the Comptroller of the Currency (OCC) finally approved Circle’s national trust bank license. "Relying on USDC, Arc and the infrastructure that reshapes cross-border value flows, Circle has become one of the most credible issuers in the world." Binance co-CEO Richard Teng said, "Our US$100 million investment and five-year commitment represent long-term belief." And Jeremy Allaire's words are more straightforward: "We see huge opportunities - relying on USDC to expand U.S. dollar access and reach global emerging markets." Emerging markets are the real target of this agreement. USDT’s moats are exactly there: cross-border transfers on low-rate networks, contract margins, and U.S. dollar savings in countries with devalued currencies. Circle pays the exchange with the most emerging market users, which is tantamount to launching a direct attack on Tether’s home turf. Divergence and Timing: Who’s Buying, and Why Binance Is Now The investment has been interpreted repeatedly because Circle's shareholder list has been extremely topical in the past six months. Duan Yongping is the most contrasting one. On July 29, 2025, he made it clear on Snowball: "I can't understand things without cash flow, and I am not interested in stablecoins." Nine months later, H&H International Investment, which he manages, disclosed for the first time in a first-quarter 13F filing that it had opened a Circle position: 200,000 shares at an average price of $95.41, about $19.08 million, accounting for 0.095% of its approximately $20 billion portfolio. In the same quarter, Dan Bin's Oriental Harbor Overseas Fund also opened a position of about 31,700 shares for the first time; on May 5, Dan Bin wrote on Weibo, "Due to the recommendation of researchers, I laid out a little Circle." On that day, CRCL once rose by more than 16%. ARK Invest has a more consistent rhythm. Its ARK Venture Fund had already invested in Circle as early as May 2024, and continued to increase its position after the IPO. The position was once about 4.51 million shares; on March 24, CRCL plummeted about 20% in a single day, and ARK's three ETFs bought a total of 161,513 shares; on July 23, when the stock price fell below $64 and fell below all major moving averages, it bought another 220,012 shares. Of course, ARK will also reduce its position - on September 14, it sold a combined 142,350 shares from ARKK and ARKW. There are always differences. SoftBank Group liquidated all 95,659 shares of Circle (approximately US$10.8 million) at one time in the first quarter of 13F, publicly stating that it would focus its funds on AI; on the other hand, CalSTRS, the California Teachers’ Retirement Fund, increased its holdings in Circle by 3,456.8% in the second quarter. As of mid-May, 485 institutions had declared holding Circle, with 353 adding to their holdings and 192 reducing their holdings in the quarter. On September 8, Jeremy Allaire reduced his holdings of 56,200 shares according to the 10b5-1 plan, cashing out approximately US$5.5 million. The differences in chips are written into the stock price: the June 2025 IPO was priced at $31, opened at $69 on the first day, peaked at $298.99, hit a low of $49.90 on February 5, 2026, and returned to $94.49 on September 21 - still down about 34% in the past 12 months, while the S&P 500 rose 16.5% during the same period. The average price target given by 26 institutions is US$104.31, with a high of US$243 and a low of US$37. The differences are so wide that they are almost absurd. Binance entered the market precisely at the point of deepest divergence. On September 15, the Senate failed to pass the closing debate motion on the CLARITY Act by a vote of 49 to 50, and CRCL fell by about 11% that day; the next day, the Arc mainnet was launched, and the market responded with "sell the fact", falling again by more than 7%; on September 17, the transaction was completed and delivered - a five-year entry was purchased at a 5% discount, with a floating profit of approximately 1,690 as of September 21 million, but it cannot be cashed out during the lock-in period. On the same day, the SEC also issued a five-year, conditional "innovation exemption" for stock tokenization. The motivation is not difficult to read either. The exchange announced in July this year that it had 323 million registered users; its January 2026 reserve report showed that its total reserves were approximately US$155.64 billion, including US$47.47 billion in stablecoins; but by August, CryptoQuant analyst Darkfost pointed out that its stablecoin reserves had fallen below US$42 billion, a new low since October 2025. Dollars are being lost on the platform, and dollar liquidity is the lifeblood of an exchange. Conclusion In the past few years, the competition for stablecoins has been understood as a war over reserve transparency and regulatory licenses. Circle relied on this narrative to obtain an OCC license, a seat on the New York Stock Exchange, and an endorsement from BlackRock. But when the USDC circulation has been hovering in the range of 73 billion to 77 billion US dollars for more than a year, and when every interest rate cut by the Federal Reserve directly drives down the reserve yield, Circle has to admit one thing: compliance allows you to enter the market, but it cannot sell the goods for you. US$100 million is not a valuation anchor, it is a channel fee. It can’t buy USDC’s circulation growth, it can only buy a prime spot on Binance’s shelves — and that spot has to be renewed every month. There is only one true test: the Circle's net take rate. If the USDC balance brought by Binance does rise in the next few quarters, but the profit margin after deducting distribution costs continues to flatten or even decline, this transaction is Circle exchanging equity for expensive exposure. On the other hand, if USDC truly becomes a pricing layer for margins, savings, settlement balances and tokenized assets, rather than a rapidly rotating inventory on exchanges, then Binance will become the first piece of the puzzle for Circle to move from "interest income tool" to "network". For Binance, the account is much easier to calculate: regardless of whether USDC can eventually shake USDT, the promotion fee will be paid monthly, and the equity will still be available for two years. In the stablecoin war, the issuer is betting on the future, and the channel party has already collected the money first.