JPMorgan Says Circle, Coinbase Face Stablecoin Profit Pressure
BLOOMBERG LAW ·
JPMorgan Chase & Co. said Circle Internet Group Inc. and Coinbase Global Inc. face mounting pressure on their stablecoin business, arguing a new partnership with crypto exchange Hyperliquid highlights a “prisoner’s dilemma” for both companies. The bank on Tuesday lowered its estimates for the blue-chip crypto firms, saying the revised arrangement changes how income generated by Circle’s USDC , the world’s second-largest stablecoin, is shared among distribution partners. Under an agreement announced in May, Coinbase became the manager of how USDC moves onto Hyperliquid’s system, sharing the majority of reserve yield revenue with the protocol. JPMorgan’s model assumes Coinbase would ... Bloomberg Law provides trusted coverage of current events enhanced with legal analysis. Log in to keep reading or access research tools and resources.
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JPMorgan analysis suggests that Circle and Coinbase are facing pressure on stablecoin profitability. The combination of stricter market regulation and a trend toward lower interest rates is expected to weaken the interest-based revenue models of these companies. Investors should closely monitor changes in the profit structures of stablecoin issuers and associated regulatory risks.
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- Virtual Assets — Lower interest rates are reducing government bond yield income, while increased regulatory compliance is raising operational costs, directly impacting profitability. There are significant concerns regarding earnings slowdowns, particularly for platform companies like Coinbase that rely heavily on stablecoin-related revenue.
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