Circle Internet Group, Inc. ($CRCL)

Hi, everyone. Good morning. My name is Gautam Chhugani. I cover digital assets at Bernstein. It's my pleasure to welcome Jeremy.

I mean, stablecoins have been a big part of the story last year and significantly with this new agentic economy, we've seen stablecoins kind of gain prominence. So Jeremy, we've been -- we've been -- Circle has been around for a while. How do you see sort of the vision evolving over the last few years and sort of going forward?

Thanks for having here this morning. A couple of things. I think just maybe rooting the answer in a little bit of kind of how we thought about really overall, the strategy of the company from early on. I think we had a few premises very early, I think, going back 13 years, in fact. So one was that over time, we would be able to establish a protocol for dollars on the Internet and that these network operating systems, what we call a network operating systems would mature to a point where effectively, the marginal cost of storing and moving value were pro zero and you'd be able to have very high velocity money that operated on these networks. That presumes that the technology would evolve to the point where you could do that, that presumes that this would actually become defined legally as money in the financial system and sort of be integrated and interoperable with the existing world. Fast forward 10 years, so that gets you into your last few years comment. Really, what we've seen is literally over the last few years, all those things have clicked have happened, right? So we now are sort of entering the fourth generation of blockchain networks, which we'll come back to as we talk about Arc and other things as well. And these networks and this infrastructure is being deemed as acceptable for financial market participants, for banks, for capital markets, for fintechs, payments firms, et cetera. We have legally defined money through major legislation all around the world, not just in the U.S. And we see the performance of these networks as well, a monetary base of something approaching $80 billion, seeing something close to $15 trillion of on-chain transaction volume where transactions now are able to be priced at a tiny fraction of Ascent and can settle in milliseconds, a few hundred milliseconds. So really have seen that first piece kind of happen. And most of the world is just figuring that out, that most of the world is just figuring out, well, how do I plug into this? How do I use this? How does this change how I move value, store value, et cetera. Now what's interesting is that what actually inspired me in starting the company was -- my background was in other Internet infrastructure, not in the financial world. and had worked on a lot of software platform development tools and things like that. And so the really exciting opportunity was this idea of programmable money and this idea that you could have machines, autonomous machines, software machines on these networks, on the Internet providing a way to automate the all forms of kind of financial market premieres and exchange of value. That, in the last few years has also matured and it's matured in 2 fundamental ways. The first is that these network computers now can efficiently deploy smart contracts and code and the kind of the hardening of that is becoming real. So we have the ability to have machine automated money in very, very different ways. And then the other is this collision with and kind of compounding with agentic in! -- and so we're -- as we look forward, which I think is at the heart of the question is, we're moving now into a world where a greater and greater amount of the labor unit economics of what happens in the economy is going to shift into AI and AI-based automation systems, and that is going to shift into machine executed contracts, machine executed value exchange and to these very specific networks and to these very specific forms of money. And so -- the early thesis is sort of being realized. And I think the concept that we have is that once you enter into this sort of autonomous software programmable money universe that the utility value for money increases pretty dramatically as well. And so the applications in the financial realm become quite different than anything we've ever seen. We're seeing that every day, we're seeing new kind of new kinds of opportunities emerge at the retail and institutional level based on that as well.

And when you started when stablecoin started and the first product market fit was around digital assets. And then part of the challenge was to kind of move down digital assets into more consumer-facing or enterprise-facing use cases. particularly in the sort of the cross-border that's where sort of it made a lot of sense. How do you see that journey evolving while also at the same time, you're seeing this sort of new layer around agentic.

Yes. I mean a few things. So as you said, right, our conception of this was that this was going to be general purpose, general architecture money, programmable money and that the applications of this were every application of money in the world. and I still very much believe that. And if we look at the utility of something like USDC and blockchain networks today, they really do span an incredible gamut of use cases. At 1 end of the spectrum, we now have AI agents that are paying a fraction of $0.01 to consume intelligence from another agent that's providing a service to it and executing that in real time. That's not possible in the existing financial system. -- that dials up to -- we are seeing more and more retail platforms, more and more payout platforms, treasury management applications Virtually every major fintech in the world is building on or integrating with USDC, and using this in different use cases. Now we also are seeing more and more traditional financial market infrastructure companies, large clearing firms, large global custodians, capital markets, infrastructure companies, derivatives platforms, global banks all beginning to plug into this infrastructure. And then obviously, something that we've talked a lot about is the value of this as a global medium of exchange and settlement layer and that's obviously driving a lot of growth in the market as a whole. So the kind of B2B money movement being the strongest. A lot of that is emerging market driven and Asia-driven -- and that is really effectively in markets around the world. The businesses both want to settle fast and settled directly over the Internet. And in many cases, they actually want to hold these digital dollars as their working capital rather than their local currencies. And so those are things that we've also seen. And I think what's interesting is we talk about this a lot. Circle has very high moats. We have very strong network effects. We've been very clear about this from when we talked about it in our S1 and post-IPO. And that is playing out. If you're a major company and you are deciding what stablecoin network am I going to use, USDC is fundamentally the only real choice that you have. If you're a real serious institution, whether it's meta, who's using USDC for global payouts, e-commerce platforms like DoorDash, the largest and potentially most valuable private company in at least in fintech Stripe. And even just yesterday, in fact, we saw an amazing thing that I love, which is Cash App, which is the key franchise from block, launched seamless USDC payments. So think about this. Every neobank, every digital wallet has been a walled garden, right? It's been like, hey, "I can pay you if you have Cash App or I can pay you if you have this product." But you have no way to have interoperable payments. We've always believed that USDC would be and stablecoin networks would be that interoperability layer. And so now if I'm in Latin America, and I've got a digital wallet like new bank, I can now pay someone in the U.S. who has cash out or if I'm a cash up, but I want to pay someone who's in Slovenia who has Revolut, I can pay them because they all speak USDC, and this is really powerful. And so what's neat about it, too, and it gets to your question about what evolves is block is a very outstanding at delivering great user experience. They're known for delivering awesome customer experiences. They've made it invisible. There's no crypto. You don't see any crypto. Your dollars are there and then you can beam them around over USDC, -- it magically figures out what network you're sending and receiving on. They've made it seamless. Now they're using our technology stack, which is awesome but -- and we've done a lot of work to facilitate kind of sort of having the crypto technology in the background. So we're starting to see these kinds of things continue to click in. And I think that's exciting. A natural question we also get asked is like for all these use cases, where is the growth? Where is it going to come from? How much growth I think we certainly see thematically that international, the international applications, the cross-border applications, the digital dollar store value utility by far, is sort of the largest segment. And a lot of these others are all kind of starting and coming online now. But obviously, when we think about the future, we're thinking about how does this build out? And how does this form of money and this infrastructure take on a broader and broader role in the totality of the way all of the financial system operates.

And when you kind of -- in the context of, for example, Cash App going live, I mean, it's largely a U.S. distribution base. There's also this conversation around stablecoins have been useful, but outside the U.S. particularly in the context of like stablecoin and Link cards in Lat Am and sort of other markets, how do you see this play out in terms of like use cases within large geography like U.S. versus outside?

I mean I think my core view, of course, is that stablecoin money and economic operating systems like these blockchain networks are the best possible infrastructure in the world for all of finance and the financial system at large, whether it's capital markets, trading, banking, lending, payments, et cetera. Everything will get rebuilt on this infrastructure in every major market in the world. So this is -- the U.S. is going to be a huge market for this. And if you look today at the major institutions that are plugging into this today, huge numbers of those are major U.S. institutions. So the tokenization of assets, which opens up completely new opportunities for how you face customers, how customers can interact with your investment products, the distribution of those all of those are taking place with major U.S. firms. And so this is not a -- this is a kind of thing in the rest of the world, and it's just the U.S. is going to stick to its old legacy infrastructure that's slow and expensive and traps capital, and so on. I don't see that happening. So I do see this very broad. But we're in a transition where think about something like what's app. No 1 in the United States use WhatsApp. Like it's just like no one used it, right? But people found its utility in emerging markets first because it was cheap, it was fast and it was better than paying their telephone companies for data. And so it solved a real problem economically for people, and it exploded in emerging markets, and then it found its way into every market in the world. I don't know if everyone here is Whatsapp, I certainly do. But I think that product market fit comes in different forms in different markets around the world, and it's very much the case that global markets in particular, Asian markets, Latin American markets, Middle East, Southeast Asia, all these have been fast adopters of this technology. And some of these markets are just frankly just more advanced than the United States. They move faster. They adopt technology faster, they're leapfrogging faster. And so this is this is also some of what drives that as well.

Yes. I want to get to the circle ecosystem, the circle stack but just addressing this consumer use case, a big use cases that we've seen take off is stablecoin link cards. Do you think that's the sort of long -- is that sort of an interim interface that we are talking about, given the card networks have millions of acceptance networks and acceptance points. It's easier to distribute stablecoins to the consumer through cards or we're still in that phase where example of being cash app, where it's still going to take time to abstract away the stablecoin so that people can beam money in the way you're talking about. So what do you think is the sort of long-term consumer-facing interface for stablecoins?

Yes. I mean, look, I think it's -- we're in an exciting time now because the capabilities of these -- the operating systems for building apps with this new kind of digital money these blockchain network operating systems are really coming into a -- into shape, whether it's things like Arc, there are other emerging platforms. But really coming into shape, I use the example of mobile and mobile operating systems just to help make the point, which is that was a long time. It was about 15 years where we were all kind of out in the desert, believing that we had mobile but actually none of us did. Like we went through a period of Symbion phones, pilots and Blackberries and Windows phone. And it was all -- excuse me, language ****ing awful -- it was just really awful. And then you hit an inflection point where hardware, network speed, the quality of operating system, new user experience paradigms, -- all these things came together and you had this huge inflection point that made the usability of mobile radically better. And that was Apple lead the way, Google followed. They both executed and that entire paradigm emerged and a completely new generation of software was born that no one had even imagined was possible. Even the greatest entrepreneurs could not imagine all the things that we created. Now I think we're approaching that point in this space. I think that the developer surface the combination of AI, agenetic interfaces, so interacting through AI and the ability to deliver, to create craft, deliver exceptional user experiences that work with all of the crypto technology hiding in the background. It is upon us. And so the ability to deliver great user experiences for end users, is here. It's arriving. And we're seeing -- I'm so excited about what we're seeing with developers on Arc right now. But this new generation of user experiences -- it is not going to look like Venmo and PayPal or it's not going to look like Zelle, it's not going to look like your ****ing bank app on your phone, it's going to be very, very different, and the technology will be invisible to people, and that is happening, and it's emerging right now. So I think my view is that we're going to go through a period of accelerated consumer product innovation and that consumer -- it will be institutional as well, but consumer product innovation and the user experience that we have will be fundamentally different. So I think with that, to your question, take Visa as an example, Visa and Mastercard, but they have built, I think, extraordinary networks, right? They have built ecosystems with very global reach, and they've executed that through stacks that reach down to terminals. They also benefit from the distribution that they now have through their tokenization in a different token, card credential tokenization. And now what you're seeing is a marrying of fully digital money like USDC, fully digital currency settlement on their own networks. So I'm someone who has a user with USDC, I want to dynamically generate a token that allows me to tap to pay in a real location. That credential is just USDC, a crypto credential into a car credential that allows the payment I as the ultimate provider of that service to that consumer. I pay Visa in USDC, Visa now is able to pay the merchant networks in USDC, companies like Stripe and ramp and others are creating the treasury accounts where you sell your funds in USDC and you're -- now you're in the flywheel. The business accounts, the commercial accounts, the settlement -- the actual settlement of the transactions in the card networks natively in digital currency and they get less capital, 24/7 settlement and the edge of the network, which is essentially these tokenized credentials at point of sale is all wired to that. So I think we're -- there's a kind of coexistence that exists there. And if I'm a card network and there's going to be 1 billion or 2 billion people in the world that are storing digital currency money instead of bank demand deposits, I don't really care. Right? I want the users, I want the flows, and I want the connectivity. Now I do think that all this creates cost compression, all this -- because this new infrastructure layer is fundamentally a lower cost -- lower unit economic cost infrastructure and many of the value-added layers that exist, whether it's sort of liability insurance or incentivization mechanisms can also migrate onto this new architecture. You will see, I believe, over time, in that total SAC cost compression, and that will be gradual. But I think that there is -- there are very interesting strong integration points there, and we're seeing that. I mean, just the growth in USDC backed card products is pretty amazing. And the volumes on that growing as well.

It's probably a good time to talk about the Circle agentic stack. And also, there are a few pieces there is also the blockchain, the Circle payments network. How do all of these fit in? And also like takes through like how do you have such payments to be in that sort of agentic economy? Because it's very different versus authorization, credential, what you see with the sort of the conventional payments versus just like here's a service, here's an API, I request for payments and boom, you've got the transaction done. So just explain how would payments happen within sort of this new agenetic world and how sort of your product stack sort of looks in that world?

Yes. So I'll answer that maybe in 2 parts. I think the first just to understand the kind of model that we have, the scope of what we're building at kind of 3 layers of the stack. And we started with the stablecoin network layer -- and that is the -- we're a money issuer and we run a network, and that network exists as a technology stack and a liquidity infrastructure all around the world. That is this kind of core franchise. We are -- we have been increasingly building more and more blockchain network technology alongside our stablecoin network, and that really has led us to the development of Arc, which if you kind of use the metaphor of operating systems, applications, services, applications, et cetera, Arc is an operating system. It is a network operating system. It is a distributed network operating system, and it runs the infrastructure for executing economic activity, contracts, money, assets, financial contracts, governance systems for identity, improving and privacy a whole set of network infrastructure that's needed for moving the economy into a truly digital form. So Arc is obviously coming soon in terms of its commercial launch. But that's foundational. We built Arc with Agentic as a core design primitive. So we built Arc during this age of AI, and we built it expecting that ultimately the primary consumer of the infrastructure would be AI infrastructure and agentic infrastructure. And we talked about that a lot in this concept of iconic OS as a kind of a critical enabler for the agentic economy. And so what does that mean? It means that every part of the stack from the operating system to our stablecoin network to all the protocols that abstract away; wallets, money movement, security payment and settlement, all of those pieces that we have built out are available to AI agents. And so AI agents are going to execute transactions. They're going to find the most efficient route and cost and path to execute those transactions. And they're going to need to be able to settle those transactions on an agent-to-agent basis. They're sort of -- when you look at this sort of agentic economy stack, we sort of see 3 things happening. And by the way, this is -- a lot of this is very new. And a lot of this, I think, has truly taken hold and become compelling in the last 4 to 5 months. As we sort of flipped the AI infrastructure from something that was more of a stand-alone LLM model to something that actually used agents and deployed agents and you can craft and build agents and even power users and companies can now craft and build agents as well. So Circle agent stack specifically is a few pieces. So 1 is -- it is a what's called a command line interface for AI to consume and use all of circle stack. Everything that we do can now be consumed by AI. And so if you're a developer, if you're an enterprise, if you're a financial institution and you want to accelerate building solutions on chain with digital money, the Circle CLI basically gives you an accelerated way. You basically -- the AI can craft and build and deploy on your behalf and can do that very fast. So this is essentially mapping to the new software development paradigm that exists and making that accessible. The second thing, though, is very specific primitives that we've built for AI and AI agents, so in circle agent stack. And by the way, you can play with this yourself. If you go to agents.circle.com, if you use Claude or codecs or open Claude, you're crazy and wild or cursor any of these tools, you can go to agents circle.com, you can copy a single line of text pasted in and it will come alive. And essentially, what we've done is we've created a way for AI, AI agents to create their own wallets. Now you are in charge. So we're not giving total control of the machines yet. But the AI agents can create wallets. And then the AI agents can consume services using micro transactions using USDC, using agent-to-agent payment standards. We have been helping to author and create the protocols and standards for how agents can pay each other. X402 is the preeminent protocol for that today. And so effectively when an AI agent comes on to the system, there is a marketplace of services that are available, deep financial research, travel data, you pick it. And what's happening is data providers, service providers, SaaS companies and other AI agent builders are basically able to convert their endpoints, meaning the access to them into data endpoints that can be consumed by AI. And the compensation model is happening in USDC. So there's things we built that are very specifically for the agent economy. You can create an agent, your agent can itself become a seller of services. So let's say you build an agent that has some special sauce. It knows a lot, you have proprietary data. It knows a lot about, I don't know, it's like -- let's say, it's an intellectual property attorney agent or whatever you want to build. And that AI agent itself can render itself as a service provider and other AI agents can consume it. And the transactions are basically instead of people spending gobs and gobs of money on tokens and subscriptions with the AI Foundation models, they can have kind of per drink payment for intelligence and work. So if I need the work of an IP attorney that is an agent, I can pay $0.05 for that IP attorney to do a job for me, that's pretty good. And so it allows you to things in that way. Everything is built on crypto. Everything is built on blockchains. Everything is built on our wallet infrastructure, it's built on USDC, it's built on the interoperability infrastructure that we have. The goal is to make that invisible and when you start to interact with these systems, it's pretty magical because the AI is dealing with all the crack that you as a user would find probably cumbersome and complex.

And do you find that in this world, stablecoins are uniquely positioned versus card networks, because I mean the kind of a transaction.

It's the only infrastructure in the world that can settle transactions through any piece of software, any piece of hardware, anywhere in the world, 24/7, 365 at a fraction of $0.01. We have transactions that can go as low as essentially like a million of a penny or something like that. So nano payments as we call them. But even like a $0.05 transaction, let's not go to crazy, a $0.05 transaction, which is, by the way, what inference costs look like. So the ability to transact at very small scales at very high speeds with settlement times that are in the 300, 400 millisecond time frames. There is no payment system in the world that can do that other than this. It doesn't exist. And so while you do need interoperability with legacy payment systems, you do need the ability for these agents to -- if they discover there's an endpoint that it's I'm going to rebook a ticket or whatever -- or I'm the shopping paradigm, right? And I'm interacting in that way. Of course, you're going to want the ability to dynamically create a payment credential that goes into the legacy systems. But for the intelligence layer and the -- again, the frame of reference is labor is being transformed into AI execution and for huge amounts of the economy over time and labor unit cost is going to be the cost of Agentic execution, which is largely the cost of inference and some special sauce. And that can be priced in a very, very different way. And so I generally don't think there's any better system in the world for this.

just changing gears, lots happening on payments with stablecoin payments for humans, enterprise, and now agentic. How does that translate for you to kind of deliver that growth in the sort of the USDC monetary base because we've also deal with this dynamic where you have digital assets, you've had a drawdown in digital assets recently. In that environment, USDC base has remained quite persistent. Just explain what growth looks like in view of this shift from digital assets to broader payments.

Yes. Look, I think -- we say this a lot, like the -- what's happening with the stablecoin network world and this new financial system, right, it's sort of an economy. And for us, -- we want to encourage as many applications in the world to be connected to the network, we want as much software in the world connected to this network, as many AI agents in the world, as many financial institutions in the world, as many developers as we can. We want to get people building on top of our platform infrastructure, which is Arc, our developer infrastructure, our protocols, on our stablecoin network, storing value, moving value, settling value in this and then actual application utilities we provide, like stable effects and CPN. So each one of these benefits from the expanding use cases that are happening for this technology. And I think what you have to believe is that this is a better infrastructure. It is aligned with the biggest value drivers in technology transformation that we've ever seen in history and that the utility of this will just -- will continue to grow. Now the specific relationship between sort of applications, money velocity and usage to sort of the amount of money that is on the network at any given time, that is very nearly impossible to predict, although over the long term, I think we will be able to. But right now, it's very difficult to predict what that looks like. But in a world where businesses and households and others, not just all around the world. Again, we have to think of this highly globalized, in a world where the benefit of keeping your money digital versus removing it from the fully digital system continues to accrue, meaning having money fully digital gives it more utility. It gives it -- it becomes higher utility money. That will provide stickiness, right? That will provide states. And so we expect those companies, financial intermediaries and others who are creating the services to store that for people, these distribution platforms and the like. We have partnerships with many of them, and we'll continue to build lots of partnerships there because we want as many of these platforms in the world to hold that money and keep it in fully digital money and keep it sticky. I think my own view is that there are macro cyclical dimensions to this. There's endogenous market factors like digital asset market factors. And then there's just sort of this ultimate growth in the TAM of this new utility value of money that comes from this infrastructure. All that combined, I think, is why various serious analyst, I don't know if you've taken a view on this or not, sort of see this form of money growing into the trillions over time because it will just -- it will make sense to store it there and have higher utility.

And just talking about regulation, right? Last year, we had the Genius Act, and we probably thought stablecoin regulation is kind of done there. And now obviously, this year has been a lot of clarity, with stablecoin rewards being the sort of the sticking point. Given where we have sort of landed today, how do you see that impacting you and Circle and its business model?

So we believe the Clarity Act is a very important piece of legislation for Circle. I think, obviously, the big thing for us was Genius Act. And we're very pleased because that really paves the way, not just in the U.S. but globally for the mainstreaming of what we do, the core business of what we do. But the Clarity Act is very powerful in several respects. The first is it creates an end-to-end legal framework for how businesses can build blockchain networks with digital tokens and where those digital tokens as a form of commodity asset can be utilized for incentivization, governance and utility. And that is what we're building with Arc. And that is what we're building with Arc token. And so having a very clear, clearly defined legal framework for how a company like Circle can operate a blockchain network and have a digital token with a clear regulatory framework around it is very powerful. And so it's not just powerful for Circle and our own initiatives, but it unlocks entrepreneurship because any developer, any business that wants to use digital tokens in their business, it gives a clear pathway to form capital around these digital tokens to utilize them as utilities and as incentive and governance mechanisms. It's a very, very powerful new system that will transform capital markets in my view. That's one. The second is very clear rules of the road for how traditional financial institutions, market structure, banks, brokerage, custodians, all players in the existing financial system, how they can implement and integrate to this market with clear guidelines from their primary regulators enforce through this, which is just a huge unlock for more activity in this, not the trading of Bitcoin. It's a huge unlock for the tokenization and trading of every form of asset and financial contract in the world. So it paves the way for an upgrading of the financial system onto these stacks, which inherently benefits everything that we do. And then finally, on the stablecoin reward piece, we really like the compromise language because what it does is it says, if you're a market platform and you're a distributor of USDC that you can absolutely pay rewards to your customers, for the utility of how they use those stablecoins. So it encourages not just money sitting around doing nothing, it encourages usage. It encourages utility. And that's ultimately what we're interested in. We're interested in the proliferation of the utility value of this new form of money. And so aligning incentives with that is actually ultimately supportive of growing our own network value proposition and network effects as well. So we actually -- we think that, that compromise language is very good. Obviously, a bill is a bill until it's a law, and we can go back to schoolhouse rock if you ever remember that cartoon. But we're just a bill right now. So we'll see what happens.

With regulatory clarity, you also get competition, more stablecoin issuers in the market. And there are like different blocks of it. I think I was looking at the audience question, again, sort of top of mind for investors as well -- at 1 end, you obviously Tether, which is a different dimension of competition. You're also seeing stripes built stablecoin stack with Bridge. You've potential talk about even banks building their own stablecoins. How do you look at that sort of broad competitive landscape?

Yes. So a couple of things. I think the first is these are network businesses stablecoins are networks. These are stablecoin networks. They are not coins, their networks. And networks have network effects, and they have very powerful flywheel driven network effects, the more apps that are integrated to the network, the more utility the network has, the more demand for the digital currency, the more liquidity that exists all around the world creates liquidity network effects, and then there's a set of infrastructure and regulatory apparatus that you have to build to make these truly global network. We have achieved very high network effects. And on our earnings call, we -- in the last 2 earnings calls, we've sort of showed the on-chain transaction volume of stablecoins. And we have grown according to third-party data to over 60% of all on-chain transactions are in USDC, and according to another third party as much as 80% of all on-chain transactions are in USDC. So we are the most used dollar-digital currency in the world, tethers is the second, in terms of the transactions. And if you look at all other stablecoins combined, it rounds to 0%. And -- so there have been a lot of products that have launched. There have been a lot of companies, including big companies who have tried to build these. But it's not just building the coin. That is not the problem. You have to build a scaled network with network effects, liquidity network effects, developer network effects, and that is very hard. It takes a very long time and so what you see is that the biggest companies in the world, whether it's a major payments company like Visa, it's one of the biggest consumer Internet franchises in the world, meta, Stripe is a great example. Stripe is all in on USDC, all their products end-to-end, their treasury products, the payments products, the Link product, their wallet products, USDC is across everything that they're doing. Cash app is a recent example. The major institutions, they're not launching their own stablecoins. And they're certainly not using tether, they're using USDC. And we think these are very high barriers. And I think we feel very confident in the strength of that position that we have. That's not to say there are not going to be lots of people who are launching products in this space. There may be what I'll call walled garden stablecoins, where effectively it's a walled garden. It's a set of that are doing this, and they're using the technology within their walled garden, that's fine. But for global scale, globally available general utilities on the Internet that works for everybody I think it's a -- we've said a winner take most market structure. And I think we're off to a very good start. I mean a year ago, after Genius passed, you couldn't go a week without some rumbling about Meta is going to relaunch a stablecoin or Amazon is going to launch a stablecoin or all these things. And what we're seeing is actually the opposite. We're seeing that as this -- as companies make these choices, they're making a bet on the platforms that have the greatest reach, interoperability, network effects, liquidity and so on.

And another topic, which is, again, top of mind for investors is your revenue model, which largely been driven by monetary base impacted by the sort of the rate environment. And we've also -- it's also been encouraging to see the other income, which is the more fee income kind of growing. How do you see that dynamic? And obviously, you also had the launch of Arc, which kind of contributes to that other line. Just take us through what -- how you expect the revenue model to evolve?

Yes. I mean, look, I think clearly, as stablecoin utility grows as we continue to build more network effects as we sign more distribution relationships, which is critical, the distribution relationships of say crypto exchanges of the past number of years, we'll have distribution relationships with lots of other types of companies over time. But to grow that monetary base and grow that utility, we -- obviously, we continue to believe that in the coming years, that is going to remain a significant source of growth and revenue for the company, obviously. At the same time, we've been laying down the foundation for a wide range of other revenue sources. And you've seen that grow. You've seen that grow with the kind of blockchain infrastructure work that we do. You've seen that grow from an aggregation of transaction fee-based models. But I think now we've got kind of these 2 other pillars as we talk about them internally, we have the Arc pillar, and we have the kind of CPN pillar. In both of those areas, we're very focused over the medium term on significant monetization from these. We're very focused on that. And obviously, as we talked about in our recent earnings call, we will, after the next quarter reporting, we will talk more about the impact of Arc on other revenue, the impact of Arc across all of our financials, right? But our -- we believe Arc can become a significant revenue driver for the company in a variety of different ways. At the transaction fee level with our cooking. And then over time, we've obviously said and it's in the Arc took in white paper that the Arc network is going to migrate to a staking security model and a staking network. And so that is going to create opportunities not just for Circle, but for lots of companies to have participate in transactional revenue streams on the Arc network. It's important to remember that Arc is an ecosystem platform there are tons of other companies that are building it and will be operating it with us and all of those companies have the opportunity and all those developers and products have an opportunity to make money with us and build value together. So it's a big tent mentality, so I'd like to say. So certainly more to say there. And we've shared, of course, we've continued to make progress on product, financial institution participation and volumes on CPN. That is a -- that remains a significant focus for us. We want to expand that and continue to expand that more aggressively. And as we said from the early stage, at first, we want to get it to a critical mass of volume, and then we want to look at how we can begin to monetize that more and that is our -- that is fully our intent is for that to -- certainly over the medium term to begin to be a real source of monetization for the company.

I'm going to ask a specific competition question from the audience, which is you think Tether growth in scale and also seemingly move into more compliance-driven workflows? How do you sort of see that the Tether kind of coming back into the -- coming into the fold, particularly the U.S. compliance.

Yes. I mean, I think Tether has experimented with issuing a new coin, not USDC, a new coin. I think it's called USAT. I think it was $20 million of circulation and basically 0 transaction volume. And I think they have a distribution deal with a video stream site I think it's like a social network video site as a wallet. So I haven't -- like I have not seen that anywhere in the institutional market, but it is an experiment for sure.

And just the offshore product, do you think at some point?

And look, I can't tell what they'll do there. I mean obviously, USDC is it's almost like a macro hedge fund basically. They sort of speculate on gold and Bitcoin and make loans. And so it's not a dollar for dollar. It's sort of -- it takes a position so like their mark-to-market -- you got to look at their mark-to-market because it's like a hedge fund. And the amount of mark-to-market gold was down, bitcoin was down, so their income was down. Like that's unless they completely change from being essentially a macro hedge fund that connected to a stablecoin network to actually being an end-to-end compliant infrastructure that is subject to Central Bank supervision around the world. I don't know that, that will be desirable for the mainstream to use.

Let me end this with this question. What do you think investors misunderstand about Circle?

I mean I think I'd say the #1 thing is that Circle is -- we are building an Internet software platform like business. We are an enormous amount of what we're building is fundamental platform infrastructure for developers enterprises and others to build on and that it is a network scale model. And I think naturally, I think the first inclination is, oh, there's this thing. It's our USDC, you have USDC, you have USDC reserves, like et cetera. So it's very easy to sort of say, okay, this is what this is. I think when people get to know me get to know us, they start to understand that the ambition is much broader. We believe that we are in the midst of the global economic system and the global financial system colliding with a completely new software architecture built from the ground up natively on the Internet, natively on this infrastructure natively with AI. And there are going to be Internet scale platform winners like the Internet scale platform winners in media, commerce, communications and other categories, but in this financial system. And we think that's the scale of the opportunity for us.

All right. I'm going to end it here. Thanks, Jeremy.

Thank you.