The partnership between Hyperliquid, Circle, and Coinbase may create a "prisoner's dilemma" that impacts the profitability of the USDC stablecoin.
By Will Canny, AI Boost|Edited by Sheldon Reback Jul 14, 2026, 2:57 p.m. 2 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on Jeremy Allaire Circle CEO. (The Washington Post / Getty Images) SummaryShow- JPMorgan indicates that the recent agreement with Hyperliquid presents a short-term obstacle for revenue at Circle and Coinbase, along with a more significant long-term risk to Circle's USDC.
- The bank noted that this partnership creates a "prisoner's dilemma" that drives Circle and Coinbase to vie for USDC distribution, negatively affecting their financials.
- Due to the Hyperliquid deal and declining crypto trading volumes and asset values, JPMorgan has revised down its earnings forecasts for both companies.
JPMorgan (JPM) has adjusted its projections for Circle Internet (CRCL) and Coinbase (COIN), arguing that their new partnership with Hyperliquid undermines the financial viability of Circle's USDC and poses a more significant long-term challenge for the stablecoin issuer.
The bank described the arrangement as a "prisoner's dilemma," which encourages both Circle and Coinbase to compete for the distribution of the dollar-pegged token, compromising their respective financial outcomes.
JPMorgan estimates that Hyperliquid, which is now a leading crypto trading platform, manages approximately $6 billion in USDC, accounting for roughly 8% of the total circulating supply.
"We believe the changes in the Hyperliquid relationship highlight the difficulties in partnership agreements between Circle and Coinbase, leading to a situation where they compete against each other in promoting USDC distribution," stated analysts led by Kenneth Worthington in a report released on Tuesday.
Hyperliquid has rapidly grown to become one of the largest trading venues in the crypto space, noted for its decentralized perpetual futures exchange. In July alone, it handled over $150 billion in trading volume, with its market share relative to Binance increasing to 11.5%, showcasing its expanding influence in the derivatives market. The amount of USDC held on Hyperliquid has surged to around $6 billion, establishing it as a vital distribution avenue for the stablecoin.
With the revised arrangement, Coinbase will classify USDC on Hyperliquid as "on-platform," allowing it to retain earnings from reserves and remit 90% to Hyperliquid. Previously, JPMorgan estimated that Coinbase shared nearly all revenue evenly with Circle.
The bank has reduced its earnings forecasts for both firms, attributing this to the Hyperliquid agreement and the current downturn in the crypto market, although it anticipates that higher interest rates may provide some support for USDC-related revenue in the long run.
In recent months, USDC has experienced a decline in momentum. Its circulating supply has decreased to around $73 billion from nearly $80 billion in March, part of a larger $10 billion reduction in the stablecoin market since May, as crypto trading activity has slowed and new regulated competitors have begun to erode the market share of USDC and Tether's USDT.
Last week, Japanese investment bank Mizuho reported that Circle's ultimate approval from the U.S. Office of the Comptroller of the Currency to create First National Digital Currency Bank is a positive development, although investors might be overestimating its importance.
Read more: Hyperliquid's USDC deal could supercharge HYPE, pressure Circle, Coinbase margins, analysts say
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