JPMorgan says COIN-CRCL deal is a money fight

New deal, same old drama

JPMorgan just tossed a grenade into the Coinbase-Circle honeymoon. The bank cut earnings forecasts for both companies after their new Hyperliquid arrangement shifted the economics of USDC in a way that looks better for one side today — and potentially uglier for both tomorrow.

Why Hyperliquid matters

Here’s the setup: Coinbase now treats USDC held on Hyperliquid as “on-platform,” collects the reserve income, and passes 90% of it to Hyperliquid. That’s a very different vibe from the old split, where Coinbase and Circle were basically divvying up the revenue more evenly. In other words, the biggest distribution deals are turning into a game of musical chairs, and somebody keeps getting stuck without a seat.

The prisoner’s dilemma, but make it crypto

JPMorgan’s Kenneth Worthington basically argued the partnership has a built-in self-destruct button:

• If Coinbase sweetens the deal to win a major partner, Circle’s cut gets thinner.
• If Circle pushes back to protect its economics, it may lose the distribution.
• If both try to stay “fair,” the next Hyperliquid-sized platform might walk away.

That’s the kind of incentive structure that sounds smart in a boardroom and messy everywhere else.

Why investors should care

Hyperliquid isn’t some tiny side quest. JPMorgan pointed to more than $150 billion in July trading volume, with about $6 billion in USDC balances on the platform. That’s real scale, and it explains why Coinbase was willing to offer such generous terms. But it also shows the trap: the more big venues emerge, the more Coinbase and Circle may have to keep cutting each other better deals to stay in the game.

Big picture: this is less about one partnership and more about whether USDC distribution can stay profitable when everyone wants a bigger slice of the stablecoin pie.