USDC has experienced a notable decrease in its circulating supply, dropping from $73.3 billion at the end of June to approximately $71.8 billion by August 6. This reduction of about $1.5 billion in just over five weeks emphasizes a surge in redemptions rather than a gradual decline. Notably, around $1 billion of this decrease occurred in a single week during late July and early August, indicating intense outflows likely driven by one or several large participants.
As USDC's supply diminishes, Circle, its issuer, delivered impressive Q2 2026 earnings. The company reported $701 million in revenue on August 5, marking significant profits despite the lower supply of its stablecoin. Interestingly, the circulating supply of USDC is still up 19% year-over-year when compared to Q2 2025 figures, illustrating resilience against a backdrop of declining supply. The recent $1.5 billion reduction translates to a roughly 2% decrease from its earlier base, a mere fraction of its total reserves.
What is fueling this decline in supply while usage rises? USDC's on-chain transaction volume reached $14.8 trillion during Q2 2026, a staggering 151% increase compared to the same quarter last year. This volume suggests substantial adoption and utilization of USDC within the broader cryptocurrency ecosystem.
Where did the funds go? The rapid withdrawal of approximately $1 billion highlights a potential urgency behind these redemptions. A singular large redeemer or a meticulously coordinated strategy from multiple entities could explain the increased demand for cash. Circle continues to provide weekly reserve updates and monthly attestations from its auditor, Deloitte, assuring that the reserves held in cash and short-duration U.S. Treasuries comfortably exceed the amount of circulating USDC.
As Circle's business landscape evolves, its Q2 earnings signify continuous growth. The company functions similarly to a money market fund, earning yields from Treasury income yet withholding returns from depositors. Furthermore, Circle has extended its partnership with Coinbase until 2029. This collaboration ensures that Coinbase continues to promote USDC on its platform, while Circle retains a share of reserve income.
Circle also made impressive strides towards regulatory alignment in 2026, securing federal and state trust bank approvals. This achievement positions the company advantageously as the framework for U.S. stablecoin regulation is taking shape.