JPMorgan says Hyperliquid’s growth could pressure Circle’s USDC revenue model

JPMorgan said the rapid rise of crypto trading platform Hyperliquid could create new pressure on the economics of Circle’s USDC stablecoin, arguing that the arrangement between Hyperliquid, Circle and Coinbase may force tougher competitive concessions over time.

In the bank’s view, the dynamic resembles a prisoner’s dilemma, where each participant has reason to preserve or expand market share even if that leads to weaker profitability for all involved. The concern centers on how incentives, distribution agreements and revenue-sharing structures around USDC could evolve as platforms compete to attract users, liquidity and transaction volume.

USDC is one of the largest dollar-pegged stablecoins in the crypto market and plays a central role in trading, payments and on-chain settlement. Circle earns revenue from the reserves backing USDC, largely through interest income generated by short-term U.S. government securities and cash-related holdings. That model has been highly sensitive not only to interest rates, but also to how much of the economic benefit Circle must share with exchanges, wallets and blockchain ecosystems that help distribute the token.

JPMorgan’s argument suggests that if fast-growing venues such as Hyperliquid gain more influence over where and how stablecoin activity takes place, Circle may face stronger demands to offer favorable terms to maintain USDC adoption. Coinbase, which has an important commercial relationship tied to USDC, could also be pulled into a more competitive environment as platforms seek incentives to support liquidity and customer growth.

The broader issue is that stablecoin issuers depend on scale, trust and broad market integration, but those advantages can become costly to defend when rivals and partners have leverage. If platforms realize that supporting a leading stablecoin can yield better financial terms, they may press for a larger share of reserve income or other benefits. That, in turn, could chip away at margins that once appeared durable.

Hyperliquid has emerged as a closely watched player in digital-asset markets, particularly as traders look for deeper liquidity and alternatives to more established centralized venues. Its growth has drawn attention not just because of trading volume, but because successful distribution in crypto increasingly depends on ecosystems, incentives and strategic partnerships rather than technology alone.

JPMorgan’s comments underscore a wider shift in the digital-assets sector. Stablecoins remain foundational infrastructure for crypto trading, but their business models are becoming more contested as new platforms expand and negotiate for a greater share of the economics. For Circle, the challenge may not be demand for USDC itself, but how much it must give up to preserve that demand.

While the analysis does not suggest an immediate breakdown in USDC’s market position, it points to a future in which growth comes with trade-offs. As competition intensifies, stablecoin issuers and distribution partners may find that winning on adoption does not always translate into stronger profits.