JPMorgan has cut its earnings forecasts for Circle and Coinbase, citing a new revenue-sharing arrangement with Hyperliquid that weakens the economics of the USDC stablecoin.
The Wall Street bank said the revised deal creates a "prisoner's dilemma" that encourages Circle and Coinbase to compete for USDC distribution at the expense of each other's margins. Analysts led by Kenneth Worthington noted that Hyperliquid now holds roughly $6 billion of USDC, about 8 percent of the stablecoin's total supply.
Under the updated terms, Coinbase treats USDC on Hyperliquid as on-platform holdings and pays 90 percent of the reserve income to the trading venue. The bank previously split nearly all revenue evenly with Circle.
JPMorgan also pointed to softer crypto trading volumes and lower asset prices as reasons for the reduced estimates. USDC's circulating supply has already declined to about $73 billion from nearly $80 billion in March.
