Circle Pays Millions for Binance Distribution as Margins Decline

Binance’s USDC customer balances have increased nearly fivefold since 2024, leading to a five-year renewal agreement and a $100 million equity investment.

Circle is strengthening its partnership with Binance after customer holdings of its USD Coin (USDC) stablecoin on the exchange nearly increased fivefold since their initial agreement.

On Sept. 22, the companies announced a new five-year commercial deal alongside Binance’s $100 million equity investment in Circle, extending a partnership that has made the world’s largest crypto exchange one of USDC’s key distribution channels.

The deal centers on broadening access to USDC, especially across emerging markets, and replaces agreements that the companies signed in November 2024 and August 2025.

Binance purchased 1.237 million Circle Class A shares for $80.84 each, representing a 5% discount to Circle’s Sept. 17 closing price, and accepted a two-year lockup on selling, pledging or hedging the shares. The commercial deal remains in place through September 2031, though either company can end it earlier under certain conditions.

The extended partnership comes after a significant rise in USDC’s presence on Binance. Binance customers held roughly $1.5 billion in USDC on Oct. 1, 2024, just before Circle signed its initial agreement with the exchange in November.

Binance’s latest Proof-of-Reserves snapshot from Sept. 1 puts customer USDC holdings at around $7.1 billion, marking an increase of roughly 376%, or nearly five times the previous level.

USDC itself has seen a much slower expansion. Circle reported $39.7 billion in USDC circulation on Nov. 29, 2024, around the time it reached its initial agreement with Binance. DeFiLlama currently estimates circulating USDC at roughly $74.4 billion, representing an increase of about 87%.

This means Binance customer holdings have increased from less than 4% of the total USDC supply when the partnership began to nearly 10% of the global supply today.

USDC Narrows Tether’s Lead on Binance#

USDC’s growth on Binance has also significantly outpaced the expansion of Tether’s stablecoin on the exchange.

Binance customers held $21.4 billion in USDT in the Oct. 1, 2024, reserve snapshot, while USDC holdings stood at $1.5 billion. This meant Binance held roughly $14.30 in USDT for every $1 of USDC.

By Sept. 1 this year, customer USDT holdings had climbed to $32.3 billion, while USDC balances reached roughly $7.1 billion. The gap had narrowed to around 4.5-to-1. Over the same period, USDT customer balances grew by about 51%, compared with an increase of roughly 376% for USDC.

Circle’s regulatory filings show that the shift accelerated following the original agreement. USDC accounted for 5% of stablecoins held on Binance on July 1, 2024, rising to 10% by Jan. 1, 2025, and reaching 22% by July 1, 2025.

The figures indicate that Binance emerged as a much larger USDC distribution channel during the partnership, while Tether continued to dominate the exchange’s dollar-token market.

Circle CEO Jeremy Allaire said the new agreement aims to expand that distribution even further.

“As the world’s largest and most widely used wallet for stablecoins and onchain finance, the partnership will accelerate global and emerging market preference and adoption of USDC. The internet financial system is expanding everywhere and this partnership will help to expand access to this new financial system to hundreds of millions of people and businesses around the world.”

He wrote on X:

Circle Has Paid a Heavy Price for That Distribution#

Binance’s growth has come with a steep cost, making the economics of the renewed partnership the bigger unresolved question.

Under the November 2024 agreement, Circle paid Binance a $60.25 million upfront fee and committed to monthly incentive payments tied to USDC held on the platform and in Binance’s treasury.

Those payments ranged from annualized mid-double-digit to high-double-digit percentages of a fixed rate that reset quarterly at a discount to three-month SOFR. Binance also agreed, subject to certain exceptions, to maintain $3 billion in USDC in its treasury, while treasury incentives required at least $1.5 billion to remain there.

Circle broadened the relationship again in August 2025 to cover USDC held through its Modular Smart Contract Wallet infrastructure. Under the agreement, incentives were set at a high-double-digit percentage of a fixed rate linked to three-month SOFR.

The new five-year contract combines and replaces both earlier arrangements, with Circle continuing to pay Binance a monthly incentive based on USDC held in the wallet. Neither the updated fee rate nor any minimum balance requirements have been disclosed.

In a note shared , Clear Street analysts Owen Lau and Nikhil Vijay said the deal gives Circle greater visibility into one of its largest distribution channels outside Coinbase, while leaving its net economics uncertain.

An additional $1 billion in USDC earning a 3.5% reserve return would generate roughly $35 million in gross annual reserve income. If Binance takes a high-double-digit share, as under earlier terms, Clear Street estimates that Circle may retain only around $4 million to $7 million.

The issue has become increasingly important for Circle’s margins. The company generated about $668 million in reserve income during the second quarter, while distribution and transaction costs reached roughly $410 million, or around 61% of reserve income. Distribution expenses outside Coinbase also rose as activity grew across both new and existing partnerships.

Binance was already responsible for a notable share of those expenses. Circle said that distribution costs tied specifically to Binance rose by $152.1 million in 2025 as the partnership expanded.

Binance Becomes a Shareholder#

The latest agreement reshapes the partnership once again, with Binance becoming an investor in the company behind the stablecoin it helps distribute.

The $100 million investment gives Binance an ownership stake in Circle while keeping the balance-based incentive structure intact. Clear Street drew a comparison with Circle’s distributor-shareholder relationship with Coinbase, although Binance’s roughly 0.5% stake remains significantly smaller.

Meanwhile, Binance CEO Richard Teng described the investment as a long-term commitment to the stablecoin. He noted:

“Trust in this industry is earned through regulation, transparency, and delivery. Today, in recognition of all three, Binance commits $100M to Circle and extends our partnership for five years. This partnership is about bringing a stable, reliable digital dollar within reach of anyone with a phone.”

The next test will center on the balances and expenses supporting those plans. Clear Street said it will monitor reported Binance USDC holdings along with Circle’s distribution costs outside Coinbase when the company reports its third-quarter results.

With Binance customers now holding more than $7 billion in USDC, those disclosures could reveal how much Circle is spending to maintain a distribution channel that has expanded from under 4% of global USDC circulation to nearly 10% in less than two years.