Hyperliquid deal with Circle and Coinbase pressures stablecoin earnings

JPMorgan said Circle and Coinbase face structural earnings pressure as their USDC partnership with Hyperliquid reduces the reserve income they retain and underscores growing strain in the stablecoin distribution model. The bank said competition for adoption may force issuers to give away a larger share of reserve yield to partners, even as USDC usage expands. Under the arrangement, Coinbase classifies USDC held on Hyperliquid as on-platform balances, receives the reserve income generated by those deposits, and sends 90% of that revenue to Hyperliquid rather than splitting it with Circle under the companies’ existing economic arrangement. JPMorgan estimated Hyperliquid holds about $6 billion of USDC, or roughly 8% of circulating supply, making the revised economics meaningful for both companies’ future earnings. Circle and Coinbase announced their partnership with Hyperliquid on May 14, and USDC became Hyperliquid’s preferred stablecoin on June 11. JPMorgan still expects USDC-related earnings to grow through 2027, helped by its forecast for a 25-basis-point Federal Reserve rate increase at the October 2026 meeting, though it said higher adoption may come with lower profitability. Analysts remain divided, with Mizuho taking a more cautious view on Circle while Bernstein and William Blair have kept positive ratings.