JPMorgan Cuts Circle, Coinbase Earnings Forecasts Over Hyperliquid USDC Deal

JPMorgan has reduced its earnings forecast for both Circle and Coinbase after it signed a new revenue-sharing deal with Hyperliquid that affected the distribution of income generated by USDC’s reserves. The agreement might affect the overall economics of the stablecoin business for both the companies in the long run, the bank added.

Wall Street is taking a closer look at the revenue-sharing arrangement between stablecoin issuers and distribution platforms. While some analysts remain optimistic about Circle’s long-term position, others believe competition for USDC adoption could reduce profit margins.

JPMorgan Raises Concerns Over Hyperliquid Agreement

JPMorgan cited a new deal between Coinbase, Circle, and Hyperliquid that will change the way the reserve currency from USDC on Coinbase is split.

As part of the deal, Coinbase will categorize USDC on Hyperliquid as “on-platform” balances. Coinbase will get those reserves but will give 90% of income back to Hyperliquid rather than divide it among themselves and Circle.

JPMorgan estimates that Hyperliquid has approximately $6 billion in USDC, which is approximately 8% of the total circulating supply.

The bank said that the situation is a “prisoner’s dilemma” because both Coinbase and Circle are looking to drive more volume on USDC while giving up a larger share of the revenue generated by the reserves backing the stablecoin.

Partnership Aims To Expand USDC Adoption

On May 14, Circle and Coinbase announced their partnership with Hyperliquid as part of their broader strategy to increase the adoption of USDC.

Hyperliquid has its own Layer-1 blockchain as well as a decentralized exchange that supports spot and perpetual futures. USDC has now emerged as the preferred stablecoin of the platform since June 11.

JPMorgan, however, has a different view about the financial terms that facilitated the deal and thinks that it will impact the future revenue of both Circle and Coinbase.

Wall Street Remains Divided on Circle

Not all analysts are being all that bearish on JPMorgan. Mizuho has also become more cautious on Circle, downgrading the stock as concerns grow over the economics of USDC.

Meanwhile, companies such as Bernstein and William Blair have retained their bullish outlook on the company.

JPMorgan also said it still expects USDC-related earnings to grow through 2027, supported by expectations that interest rates will remain higher for longer. The bank now expects a 25 basis point increase in interest rates at the Federal Reserve’s October 2026 meeting.