JPMorgan Warns Hyperliquid Deal Could Squeeze Circle, Coinbase

July 14, 2026 — JPMorgan has lowered earnings forecasts for Circle and Coinbase following a new USDC revenue-sharing agreement with Hyperliquid, warning the deal could pressure stablecoin profit margins. The revised terms mean Coinbase will return 90% of USDC reserve yields earned on Hyperliquid’s platform, reducing long-term profitability for both companies even as adoption grows.

Immediate Details & Direct Quotes

According to a JPMorgan research note, the revised agreement shifts how income from USDC’s reserve yields is divided among distribution partners. Under the new arrangement, Coinbase will classify USDC held on Hyperliquid as “on-platform” balances, allowing the exchange to receive reserve income from those deposits but requiring it to return 90% of that revenue to Hyperliquid rather than splitting proceeds with Circle.

JPMorgan estimates Hyperliquid currently holds approximately $6 billion worth of USDC, representing roughly 8% of the stablecoin’s circulating supply. The bank described a competitive dynamic where both companies face pressure to increase USDC usage even if it means surrendering a larger portion of reserve revenue to distribution partners.

“The bank argued that competition among distribution partners may force issuers to give away a larger share of reserve income to secure market share,” the research note stated.

Market Context & Reaction

The revenue-sharing concerns follow a May 14 announcement when Circle and Coinbase revealed their partnership with Hyperliquid to deepen USDC integration across the crypto trading platform. Since June 11, USDC has become Hyperliquid’s preferred stablecoin, strengthening the platform’s importance within Circle’s distribution network.

JPMorgan said the commercial terms supporting that expansion, rather than growth in usage itself, have become the main issue for investors evaluating future earnings. The bank characterized the situation as one where efforts to expand adoption could come at the cost of lower profitability.

Wall Street analysts remain divided on Circle’s outlook. Mizuho has taken a cautious stance, downgrading the stock as concerns grow over whether expanding USDC adoption will continue generating attractive economics. By contrast, Bernstein and William Blair have maintained positive ratings, expecting continued growth in digital dollar usage despite increasing competition.

Background & Historical Context

Hyperliquid operates both a Layer-1 blockchain and a decentralized exchange offering spot and perpetual futures markets. The platform’s growing role in the USDC ecosystem has made it a critical distribution partner for Circle and Coinbase.

Even after cutting its earnings estimates, JPMorgan continues to forecast growth in USDC-related earnings through 2027. The bank attributed this expectation to its interest-rate outlook, which now includes a 25-basis-point Federal Reserve rate increase at the October 2026 meeting. Higher rates generally increase income earned on the cash and Treasury reserves backing USDC, providing an offset to revenue-sharing concessions outlined in the Hyperliquid agreement.

What This Means

For investors, the latest debate shifts attention away from USDC’s circulating supply and toward how reserve income is divided among issuers, exchanges, and distribution partners. JPMorgan’s analysis suggests that while adoption can continue rising, the financial value retained by Circle and Coinbase may face increasing pressure as more platforms negotiate similar commercial terms.

The ongoing revenue-sharing dynamics highlight a fundamental tension in stablecoin economics: expanding distribution often requires sacrificing margins. As Hyperliquid and other platforms seek favorable terms, both Circle and Coinbase will need to balance growth ambitions with profitability expectations going forward.

This article is for informational purposes only and does not constitute financial advice. Readers should conduct their own research before making investment decisions.