Circle's biggest shortcoming right now is that its income primarily relies on US Treasuries.

In Q1 2026, Circle's total revenue and reserve income was $694 million, of which reserve income was $653 million, meaning that about 94% still comes from the yield on USDC reserve assets.

Moreover, the reserve return rate for the quarter has already decreased by 66 basis points. This structure looks good during high interest rate periods, but once the dollar interest rates decline (the Federal Reserve cuts rates), Circle will find itself in an awkward position with no second growth curve.

Solutions are indeed not easy; what I am saying now is just off the top of my head. In fact, we can see that Tether, also a stablecoin, has not found a stable source of yield either. Tether has made investments, issued corporate bonds, and purchased Bitcoin and gold, but, based on financial reports, still does not have a very strong second growth curve.

However, the strongest aspect of USDT is its acceptance in Asia, Africa, and Latin America, which is profitable, but USDC's acceptance is significantly inferior compared to USDT.

If given a choice, it is definitely CPN that should be accelerated the most. CPN directly targets banks, PSPs, VASPs, enterprises, and cross-border payment scenarios, addressing who will use USDC for real payments and settlements. (Although I find it very difficult to solve)

As for Arc, I believe it mainly reduces transaction costs; unless CPN has fully landed and amassed a large user base, Arc's significance is limited.

Currently, Circle's biggest issue remains solving the settlement problem; there is no way to address the issue of non-cryptocurrency users.

In fact, Circle is not unable to issue credit cards on its own, but the biggest problem is that the reserves of USDC cannot be used for lending. In other words, the primary source of income for the banking system, Circle, or stablecoins cannot be utilized.

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