Fortune Warns of Risks from Circle and IBM Deal

Circle's recent purchase of approximately 1,000 blockchain patents from IBM is stirring concerns in the stablecoin sector and blockchain ecosystem. Jeff John Roberts, a finance and cryptocurrency editor at Fortune, highlighted the implications of this acquisition.

Announced on July 27, the deal involves a comprehensive patent portfolio that includes technologies related to banking, financial services, insurance, supply chain verification, and secure cloud operations. This move positions Circle as the top U.S. holder of blockchain patents, a development seen as a potential lever against competitors in the market.

Circle has acquired fundamental assets from the @IBM blockchain patent portfolio, including 680+ patent families and nearly 1,000 issued patents worldwide.

The acquisition makes Circle the leading U.S. blockchain patent holder and strengthens the foundation behind USDC, CPN,… pic.twitter.com/lp6F6z55aw

— Circle (@circle) July 27, 2026

The acquisition is expected to bolster the growth of USDC, the Circle Payments Network, and the Arc blockchain, alongside tools aimed at AI financial agents. However, Roberts cautions that Circle may leverage this patent portfolio to impose licensing fees, deter startups through litigation threats, or negotiate from a position of strength with banks and payment companies.

Additionally, Circle faces emerging competition with the introduction of Open USD, a stablecoin backed by high-profile partners like Stripe, Visa, and BlackRock. Open Standard aims to offer a significant return to participants from reserve income after fees, potentially challenging Circle's model, which relies heavily on income from USDC reserves.

While Circle presents the deal as a means to enhance "internet-native finance," the specifics regarding the number of patents issued in the U.S. and IBM's licensing rights remain unclear. Moreover, the potential for Circle to utilize these patents in litigation or to pressure developers has yet to be substantiated.

In its latest financial report, Circle indicated expected revenue and reserve income of $2.7 billion for 2025, a 64% increase year-over-year. Nonetheless, the company also reported a net loss of $70 million, attributed to substantial stock-based compensation expenses, though it achieved an operating profit of about $157 million. Analysts from JPMorgan also warned that recent agreements between Circle and Coinbase could adversely affect USDC and raise risks for the involved parties.