Circle CEO Jeremy Allaire on 108% USDC growth, $9.6T on-chain activity, and the Arc Layer-1 blockchain launch

Speaker 1: Give us the rundown. What's the latest in your world?

Speaker 13: Yeah. Well, this morning, we announced our q three earnings.

Speaker 8: Mhmm.

Speaker 13: It was a tremendous quarter. We saw USDC grow a 108%

Speaker 1: Wow.

Speaker 13: Year on year, which is fantastic. The amount of activity happening on chain with USDC Mhmm. Grew about 600% year over year to $9,600,000,000,000 of on chain activity That with

Speaker 2: might biggest gong for that. I think that's the biggest Gong ever. Maybe we've hit the Gong for various countries' GDPs.

Speaker 1: Might have hit for a GDP once, but that's it. The only thing that's

Speaker 2: volume. Triggered

Speaker 1: That is yeah. That is remarkable. That's a lot. Of course, that's the nature of these networks.

Speaker 13: Yeah. Lot lot of other great stuff. I mean, we we we we launched something called CPN, which is an on chain money movement payment network Mhmm. Earlier this year. That that is growing very fast. Dozens of financial institutions coming on that network. It's already gotten to an annualized payment volume of about $3,400,000,000 Key though, just from a financials perspective, we saw adjusted EBITDA grow 78 to $166,000,000 in the quarter. That's a 57% adjusted EBITDA margin, which is about seven thirty basis point expansion. And so strong performance on that as well. And then I think really importantly, we recently launched Arc into Testnet. And Arc is a new layer on blockchain network that Circle has been building into the market. We had over 100 major companies, major banks, payment system operators like Visa and Mastercard, major AI companies, major exchanges, e commerce companies, gig economy companies, all these working with us, collaborating us to deliver Arc. And we also announced this morning that we're exploring a token, a native token for Arc network, which is an exciting development for us as well. And so we're seeing a lot of activity in the space. We had the Genius Act passed recently, and so we're also just starting to see more and more major institutions, major financial firms, payments companies getting in the game and collaborating with us and building products with us as well.

Speaker 1: Can you tell me anything about the Anthropic, relationship? It it there's this very interesting concept of, like, using stablecoins to power agents in There's the that. And then there's also just like Anthropic might need to pay someone internationally. Can you give me any guidance on like where we are on that?

Speaker 13: Yes. I mean, look, a couple of things on that. I think the first is that, you know, we've been working alongside others on these standards for agentic payments using

Speaker 1: which does not have MCP. Does not have data points yet, but it should be maybe in v two or something that you

Speaker 13: Well, yeah. And and standards like x four zero two and Google's agent to payment standard. We're collaborating on both of those. Cool. We're we're releasing tools for those. Yep. And, you know, we actually have a number of like agent developer tools, companies that are that are supporting these things as well. And so that's actually happening. It's actually one of the key design centers for the Arc blockchain network that we're building, which is we envision a world where over time the velocity of money increases and more and more of our economic activity is machine intermediated. And that machine intermediation is going to be in these new computing networks, these provable trusted computing networks, which we call blockchain networks. And AI agents will become, we believe, the primary intermediary that's intermediating activity on these. And so we see that as sort of if you look at these trends converging over the coming several years, we see these kind of compounding each other. And so yes, we were excited to have Anthropic as a collaborating partner for us with ARC. And I think we had a number of other AI focused firms there too. And I think it just speaks to the fact that we need a substrate. We need an execution environment that AI agents can use that are trustworthy, provable. And look, AI agents need to be able to make a $05 transaction for consuming some tokens or a $50 transaction. It needs to work anywhere in the world where software works, and that's what these new networks are really good at. And so there's not a payment system that's ever really been built to support that. And I think something like USDC and then these new networks like ARC Network and standards like X402 and others really help with that a lot.

Speaker 2: Talk about just like the strategy of going full stack and how you guys are positioned against competition at the different levels. You guys are an issuer. You're build you know, you're, building your own network. You're gonna have a native token. There's ton there's, nowadays, it feels like there's probably a new stablecoin that gets created every second of every day. Right? Not not just a net new of an existing stablecoin, but an entirely new stable. You guys are, you know, well positioned in a lot of ways, but I guess talk about how you view your your competitive position as a variety of other networks come online and new stablecoins come online.

Speaker 13: Yes, absolutely. I mean, I think the first, just start with the core, which is our stablecoin network has really strong network effects. We have liquidity network effects globally. We have infrastructure network effects just in terms of where we're plugged in around the world. There's tens of thousands of products and services that integrate to our network, which really drives the developer flywheels. And so we're in a very strong position there. And we're taking that and we're expanding kind of down the stack and up the stack. And I think in our view, if you think about where we are in the evolution of this, the global economic system is enormous. And we expect more and more of the economic system to, as I said, become machine intermediated on these new kind of economic operating systems. And we're still at the front edge of that. We have a market that really grew out of speculation on cryptocurrencies, and now we're seeing like more and more of actual financial contracts, actual trade flows, payments flows, treasury activities, investment products, lending products. All of this is actually starting to come over, but we're at the front edge of that. And so I think our view is that there are going to be some very significant scaled Internet platform companies built out of this transformation over the next five, ten, fifteen years. We think that these can be as big or bigger than prior Internet platform companies that were built around centers of gravity around search or social or mobile or cloud or e commerce, we think that that's going to take place. And we think that we're in a very good position to provide really great infrastructure across those different layers. And I think if you look at what we've been able to do with Arc, even just getting to Testnet, the range of major firms from around the world that touch literally over $100,000,000,000,000 of assets, whether those are custodians, exchanges, clearinghouses, payment systems, etcetera, We're putting forward a model that we think can work for scaled mainstream adoption. And so that's an infrastructure problem. And we're doing it in a way where we can build a distributed network of distributed stakeholder participation, distributed governance and kind of bring that into the world. And obviously, that's what we're considering as we evaluate the design of an ARC token as well. And then on the other hand, we definitely see an application layer emerging on top of these platforms. And I think likewise, we're still in the early stages of the application layers being built. We are definitely taking a crack at part of that by building a payment utility, this CPN as a payment application, but we're designing it in a way where other financial institutions can use it, benefit from it and generate revenue from it. We're not trying to compete with them as well. And so at every layer of what we do, we try and build kind of market neutrality and interoperability at the core, and that has served us well. I mean one of the things we've pointed out this morning in the earnings call is we actually run, as of October, the largest cross chain interoperability protocol in the world. CCTP, which is Circle's cross chain transfer protocol, in October was greater than 50% of all cross chain traffic accounting for all assets across all blockchains. And that's really significant. We really want to be part of the solution to interoperability while we build at these different layers of the stack.

Speaker 2: We've had a number of conversations about the local regulatory environment, how that's changing recently. Internationally? Last time you were on the show, we talked about how, you know, part of Circle's edge is having offices in a, you know, in a bunch of different countries and being set up to navigate what, what will ultimately be unique regulatory environments in a in a a bunch of different countries?

Speaker 13: Well, amazing it's actually. Since the Genius Act, we've seen almost every major government in the world accelerating plans around building local rules around stablecoins. We've seen, for example, Hong Kong in August went effective with their new rules. We're seeing regimes working on this from major emerging markets to some of the largest developed markets like Korea, which is accelerating their efforts around stablecoin rules, U. K. Accelerating their efforts. So now everyone is sort of getting behind this model of private sector, bank and nonbank issued stablecoins, clear supervision, usually supervision by the central banks, just like we're going to be overseen by the national bank regulator here in The United States. And so that kind of standard is cascading around the world. And I think also a lot of these regulators are looking at ways to support kind of reciprocity or kind of consistency as well. And so I think that's really important as we build infrastructure that we know that it will work in all these different places around the world. So I would say that the activity for us internationally has really, really accelerated and you'll see a lot more as well as we go forward. But I think The US is actually really providing leadership right now on this in this whole area and the rest of the world is taking notice and following. It's kind of a national competitiveness issue as well.

Speaker 1: Fantastic. Well, congratulations

Speaker 2: Makes sense.

Speaker 1: On a successful earning season. We'd love to have you back on the show soon. And we'll Thanks, guys.

Speaker 2: Catch up.

Speaker 1: Have a great rest of week. Likewise. We'll talk to soon.

Speaker 2: Cheers. Yeah. Bye bye.

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