Binance injects $100 million into Circle with a 5-year agreement focused on expanding USDC coverage across the exchange.
The deal is more than Binance just getting distribution rights. It is now also a shareholder in the company issuing the coin; therefore, it has direct economic interests in Circle in addition to having distribution interests.
Binance makes a longer-term USDC commitment
According to Circle’s announcement, Binance purchased the shares through a private sale at a 5% discount to Circle’s market price before the deal closed.
The exchange has agreed not to sell the shares for up to two years, subject to limited exceptions.
Binance will list and support USDC across its products, especially in its emerging markets. The stablecoin will be used in trading, savings, and investment products.
Circle would offer infrastructure to hold and use USDC. Binance would also incentivize adoption via mechanisms such as reduced fees on trading pairs related to USDC.
The companies already worked together. In early 2024, USDC started to become more integrated across all areas of Binance. The exchange also started to use it for their corporate treasury deposits.
Binance’s investment in Circle could further cement that association. If Binance were to increase the utilization of USDC, it stands to profit from both the increased use of USDC on the platform, and also from the added value of the shares it possesses in Circle.
The deal could reduce Circle’s reliance on Coinbase
Coinbase remains one of Circle’s most important partners. It earns revenue from USDC held on its platform under a long-running agreement with the stablecoin issuer.
Yet Binance gives Circle another powerful route to users, outside the United States; to grow USDC without being so reliant on Coinbase for distribution.
The deal also lets Binance enhance its stablecoin business without bearing responsibility for issuing or administering its native, dollar-backed asset. This is done by Circle whilst the users are channelled from the vast international clientele of Binance.
Circle chose not to specify the amount its revenue share with Binance might be, in return for promoting the stablecoin across its trading platform.
The company also did not say if its latest deal has balance-based revenue share features, unlike its former deal with Binance. It involved Circle paying the company according to the stablecoin in its wallet accounts monthly, in fees related to the balances.
Neither company has announced how many users they are targeting in the five-year partnership.
Final Summary
- The deal states that Binance gave Circle $100 million in investment and that Binance can hold the stock for between one and two years.
- The new deal could allow USDC to be distributed more widely, as well as providing Circle with a major partner in addition to Coinbase.