Is the AI payment narrative of AI · Circle able to withstand real-world scrutiny?

Text | Zhou Ailin

Editor | Liu Peng

“Circle finally helped me break even.” An overseas stock market investor, Wang Song (pseudonym), told Tencent News “Qianwang.”

As the “first major stablecoin” company, Circle went public in 2025, reaching a peak right out of the gate—on May 25, 2025, Circle opened at $69, closing near $107 on the first day, and even surged to around $200 later. Tencent News “Qianwang” also learned that many institutional investors had sold their IPO shares around $90 to lock in profits, while some individual investors bought in above $120, only to be swept up and liquidated by a wave of short sellers. For a long period afterward, cryptocurrencies entered a bear market, and Circle hovered around $60.

Recently, however, due to better-than-expected Q4 earnings, in just a few trading days (up to March 17), Circle’s stock price rose from $60 to over $125, an increase of nearly 80%. The key catalyst was not financial data but an interesting point made during the earnings call: Circle’s Global Marketing Director, Peter Schroeder, mentioned that about 99% of transactions between AI Agents are currently conducted using USDC (Circle’s stablecoin). Over the past nine months, AI agents have completed 140 million payments totaling $43 million, with 98.6% settled in USDC, averaging just $0.31 per transaction.

However, in reality, most AI agents still settle costs through traditional payment systems—credit cards—not stablecoins. The 98.6% figure likely refers to on-chain experimental environments. Can the AI narrative really be sustained? Is the spring of stablecoins or even cryptocurrencies truly arriving?

“90% of AI Agents Use USDC for Payments” Is Not True

Previously, Circle’s stock price dipped as low as $49, with the bubble mostly deflated. Based on cautious expectations for 2028 (a $200 billion scale with $800 million to $1 billion in net profit), a price around $60 corresponds to less than 20 times P/E, leaving room for valuation recovery.

“Before earnings release, hedge funds had built $500 million in short positions. When earnings beat expectations and the new narrative exploded, short sellers were forced to cover, buying in to avoid losses, creating a resonance of ‘passive buying + chasing high,’ which pushed the stock from $61 to quickly break $100,” said a foreign hedge fund insider to Tencent News “Qianwang.” But what really stirs the market’s nerves is the imagination brought by AI.

Let’s first look at the AI narrative that triggered Circle’s rally.

Li Lianxuan, Director of Alliance Chuan Group and Research Assistant at the Hong Kong Polytechnic University’s Digital Assets and Innovation Center, told Tencent News “Qianwang” that AI agent payment scenarios typically have three characteristics: 24/7 operation, high-frequency small transactions, and global settlement. For example, an AI agent performing a task may need to continuously pay for API calls, compute rental, and data access. These payments are often machine-to-machine, small in amount but very frequent. Some estimates suggest the average transaction between agents might be around $0.30.

In such cases, traditional financial systems are not well-suited. On one hand, fees for credit cards and traditional payment methods are usually around 2-3%. On the other hand, cross-border bank settlements are slow and not conducive to automated programmatic calls. Stablecoins naturally have advantages in these machine-to-machine payment scenarios. Therefore, a new narrative is emerging: stablecoins could become the “machine payment layer” for AI agents.

Against this backdrop, Circle aims to tell a story: the advantages of USDC mainly lie in three areas.

First is the scale and network effect of stablecoins. USDC remains the second-largest stablecoin globally, the largest in a compliant stablecoin ecosystem, with broad ecosystem integration.

Second is the relatively mature developer infrastructure. Circle provides comprehensive APIs, wallets, and payment tools, making it easier to embed into AI automation workflows.

Third is the clear compliance advantage. If future commercial-scale AI payments expand, large tech companies or enterprises are more likely to choose compliant stablecoin systems rather than fully decentralized stablecoins.

However, Li Lianxuan also notes that all this is still in the “experimental” stage, even “imagination.” Schroeder’s mention of 99% data points is misleading—“OpenAI only accepts credit cards, Stripe, etc. for payments. How could stablecoins account for 99% of total payments?”

AI Narrative Is Still in Early Testing

Undoubtedly, the on-chain payment market for AI agents is still very early.

Specifically, the current AI industry’s business structure is highly platformized. Whether it’s model inference, compute supply, or API calls, most services are concentrated on a few major tech platforms like OpenAI, Google, and Amazon. In this model, AI service payments typically follow: user or enterprise → platform account → API call → monthly bill → settled via credit card or enterprise invoice.

In other words, stablecoins currently play almost no role in this system. The advantages of the traditional model include centralized account and risk management, mature payment systems, and consolidated billing for API calls. Therefore, mainstream AI business models do not have an urgent need to shift to on-chain payments.

More critically, whether a unified stablecoin standard will emerge for the AI ecosystem remains unknown. Li Lianxuan believes that future machine payment systems may involve multiple settlement assets, such as USDC, USDT, native on-chain stablecoins, or even corporate stablecoins issued by large tech firms. If no dominant USDC-based payment network forms, Circle’s advantages could be somewhat diminished.

Additionally, not all AI payment scenarios require blockchain. For example, internal enterprise API calls or cloud compute costs can be fully automated through traditional account systems.

Overall, the AI + stablecoin narrative remains an early-stage story. Circle’s vision of an “AI economy” is essentially real-time machine-to-machine payments, based on a more forward-looking technological concept—an open network AI economy.

In this vision, AI agents no longer just call services from a single platform but autonomously seek resources across the open internet, such as data APIs, compute power, and analytical tools, settling via micro-payments. In such a framework, payment amounts are often tiny—cents or less—and stablecoins are seen as suitable tools for machine-to-machine settlement. The statistics Circle disclosed are from this experimental ecosystem, not the entire market.

Is Circle Worth This Valuation?

Setting aside the AI narrative, is Circle really worth its current valuation?

The company indeed delivered impressive Q4 results—adjusted EBITDA of $167 million, up over 400% year-over-year; net profit attributable to the company of $133 million; EPS of $0.43, far exceeding the market expectation of $0.16.

Reserve asset interest income is Circle’s core revenue, accounting for about 80-90% of total income. The strong quarterly performance was mainly driven by this. In Q4 2025, reserve interest income reached $733 million, up about 70% year-over-year, mainly due to the rapid expansion of USDC circulation from about $43 billion at the end of 2024 to approximately $75 billion in the same period in 2025.

Even amid the crypto bear market, the rapid growth of USDC is driven by three factors: increased risk-averse demand during the bear market, with funds shifting from volatile assets to stablecoins; the growth of RWA (real-world asset) markets from about $5 billion in early 2025 to around $26 billion in early 2026, with many on-chain assets using USDC for trading and settlement; and the cost and settlement efficiency advantages of stablecoins, leading more fintech companies to use USDC for cross-border payments and transactions.

It’s clear that stablecoin applications are gradually expanding beyond pure crypto trading and DeFi. Early stablecoins mainly served exchanges and DeFi, but recently, their use in cross-border payments, RWA settlement, and AI agent payments has surged. These real-world payment needs are beginning to detach stablecoin usage from crypto market cycles.

Nevertheless, industry forecasts suggest that in 2026, Circle’s EPS will reach $1.13, implying a forward P/E of about 102, which is quite high. About half of Circle’s revenue goes to its main distribution channel—cryptocurrency exchange Coinbase.

Currently, Circle benefits from high US Treasury yields driven by inflation fears and rate cuts expectations, which could boost interest income from reserves (mainly US Treasuries). US crypto legislation is advancing, with the Trump administration supporting digital assets, accelerating industry compliance. As the first compliant stablecoin company, Circle benefits directly. However, after the recent surge, the current valuation seems less attractive, or the safety margin has significantly decreased.

It’s also important to consider the broader crypto bear market environment—Bitcoin recently rebounded close to $80,000, but over the past decade, the market has typically experienced roughly four-year bull-bear cycles, with bear phases lasting 8 to 12 months.

Li Lianxuan also told Tencent News “Qianwang” that in recent years, the crypto industry has lacked truly groundbreaking technological innovations. Market hotspots have shifted toward meme coins and speculative assets, leading to a clear “PvP gambling” ecosystem, which weakens the industry’s long-term fundamentals. Over the past year, some US political figures and interest groups have profited massively through token issuance, with market movements often pre-empted by prior fund placements. Such behaviors have, to some extent, drained liquidity and undermined investor confidence.