Bernstein: Circle's CEO Declares USDC Has 60-80% of All On-Chain Transactions — and Says Arc Could Reshape the Revenue Model
Jeremy Allaire presents at the Bernstein 42nd Annual Strategic Decisions Conference, May 28, 2026
Circle Internet Group CEO Jeremy Allaire used a Bernstein conference appearance to make one of the most assertive competitive claims the company has publicly delivered: that USDC now accounts for between 60% and 80% of all on-chain stablecoin transaction volume, citing third-party data, with every other stablecoin combined rounding to essentially zero. For a company that IPO'd recently and still has investors calibrating the durability of its moat, that single data point reframes the competitive conversation considerably.
The Network Effects Argument Is No Longer Theoretical
Allaire's core message was that the stablecoin market is not a product market — it is a network market — and that Circle has already won the network race in practical terms. "USDC is fundamentally the only real choice that you have," he said, pointing to Meta using USDC for global payouts, Stripe building its entire product stack — treasury, payments, wallets — on USDC, and most recently Cash App quietly launching seamless USDC payments. That last example carries particular weight because Block is known for consumer experience, not crypto ideology, and the integration is designed to be invisible to the end user. As Allaire put it, "your dollars are there and then you can beam them around over USDC."
The interoperability implication is significant. A user in Latin America with Nubank can now pay a Cash App user in the United States, who can pay a Revolut user in Slovenia — all without either party touching crypto directly. Allaire described this as the realization of a thesis Circle held from its founding: that USDC would become the interoperability layer that replaces the walled-garden model of digital wallets.
Arc Is the Most Underappreciated Part of the Story
Allaire was explicit that investors who see Circle purely as a reserve-income business tied to USDC balances are missing the larger architecture the company is building. The most forward-looking element of the presentation centered on Arc, Circle's blockchain network operating system, which Allaire described as a distributed economic infrastructure layer designed from inception around agentic AI — not retrofitted to it.
"We built Arc during this age of AI," Allaire said. "We built it expecting that ultimately the primary consumer of the infrastructure would be AI infrastructure and agentic infrastructure." The commercial launch is described as coming soon, and Circle has committed to providing more detailed financial disclosure on Arc's contribution to revenue starting after the next quarterly earnings report.
The revenue model Allaire outlined for Arc includes transaction fees, the Arc token itself, and eventually a staking security model that would allow third-party participants to share in transactional revenue streams on the network. He was careful to frame Arc as an ecosystem platform with a "big tent" philosophy rather than a proprietary walled garden.
The Agentic Economy Use Case Is Arriving Faster Than Expected
Bernstein analyst Gautam Chhugani pressed Allaire on the timeline for agentic payments, and the answer was more urgent than many investors likely expect. Allaire said the shift from standalone LLM models to deployable, networked agents has "truly taken hold and become compelling in the last four to five months," and that the payment infrastructure requirements of that world are uniquely suited to stablecoins.
The logic is straightforward: card networks and traditional payment rails cannot settle a $0.05 transaction between two software agents in 300 milliseconds at a fraction of a cent. Stablecoins can. "There is no payment system in the world that can do that other than this," Allaire said. "It doesn't exist." Circle's agent stack at agents.circle.com already allows AI agents to create their own wallets, consume services via micro-transactions in USDC, and themselves become service providers to other agents — with compensation flowing automatically through what Allaire called "per drink payment for intelligence and work."
The x402 protocol, which Circle has helped author, is described as the emerging standard for agent-to-agent payments. The strategic implication is that if agentic AI does compress large portions of labor into machine-executed contracts — Allaire's framing is that "labor unit economics" will shift into AI execution — then the payment infrastructure those agents use becomes an enormous embedded revenue opportunity for whoever controls the dominant stablecoin network.
Tether Is a Macro Hedge Fund, Not a Peer
On the competition question, Allaire was characteristically direct about Tether. He noted that Tether's U.S.-facing stablecoin experiment, apparently called USAT, has roughly $20 million in circulation and negligible transaction volume. More pointedly, he described Tether's core business model in unflattering terms: "It's almost like a macro hedge fund basically. They speculate on gold and Bitcoin and make loans. And so it's not a dollar for dollar... you got to look at their mark-to-market because it's like a hedge fund." He argued that unless Tether fundamentally restructures to become end-to-end compliant and subject to central bank supervision, it is not a credible competitor for institutional adoption. That characterization — accurate or not — will matter to investors trying to understand the ceiling on USDC's addressable market.
Regulation: GENIUS Act Sets the Stage, CLARITY Act Unlocks Arc
Allaire was careful to distinguish between the two pieces of legislation in play. The GENIUS Act, now largely expected to pass, validates the core stablecoin business. But he was notably enthusiastic about the CLARITY Act, describing it as "very powerful" specifically because it creates a legal framework for operating a blockchain network with a digital token — precisely what Circle is doing with Arc. The stablecoin rewards compromise language in the CLARITY Act was also welcomed, because it directs incentives toward utility and usage rather than passive holding, which Allaire views as aligned with Circle's network growth objectives.
Revenue Diversification Is the Central Investment Question
The honest framing of Circle's current financial profile is that reserve income remains the dominant revenue driver and that sensitivity to interest rates is real. Allaire acknowledged this without evasion but pointed to two emerging pillars — Arc and the Circle Payments Network — as the medium-term answer. On CPN, the stated plan is to reach critical volume mass first and then begin active monetization, with management describing that transition as "fully our intent" over the medium term. On Arc, more detail is promised after next quarter.
When asked what investors most misunderstand about Circle, Allaire's answer cut to the heart of the valuation debate: "Circle is — we are building an Internet software platform-like business... it is a network scale model." The company's own framing is that there will be Internet-scale platform winners in the financial system just as there were in media, commerce, and communications, and that Circle is positioned to be one of them. Whether the market ultimately values it that way will depend heavily on how quickly Arc and CPN translate into fee income that reduces dependence on the rate environment — and on that, the next two to three earnings reports will be critical.