HCS Score
Red Line Violations
Research Opinion, Not a Fatwa
These are absolute prohibitions in Islamic finance. If any red line is triggered, the asset is automatically classified as HARAM.
Ecosystem Riba Exposure
Not directly or indirectly connected to interest generating mechanisms
Gambling / Betting
No gambling or betting mechanism
Haram Industry
Not involved in haram industry
Based on Red Line Screening and HCS Scoring.
Haram / Non Compliant
This cryptocurrency is evaluated as Haram for investment and use because the asset demonstrates material Sharia compliance concerns within the CoinStudy HCS framework.
Explanation
This asset shows significant concerns related to Sharia compliance, financial structure, or speculative design.
Reviewed by
CoinStudy Shariah Board
Scope of This Ruling
This analysis applies CoinStudy's four object analytical framework to USDC. USDC is not a single analytical object: it comprises four distinct entities with different Shariah classifications, and a complete analysis must address each one separately before arriving at a classification for the token itself.
Object 1 is Circle Internet Group, Inc., the parent company of USDC's issuing entities, which is separately assessable for Muslim investors considering CRCL stock under CoinStudy's adapted halal stock screening methodology. Object 2 is the USDC reserve portfolio, the pool of assets held to back USDC in circulation. Object 3 is the USDC token itself, the digital instrument representing access to USDC's redemption framework, subject to Circle's eligibility and account requirements for direct redemption access. Object 4 is individual user transactions using USDC as a payment medium, such as transfers, payments for goods or services, and on-chain settlement.
The HCS classification in this analysis concerns Object 3, the USDC token, as a holdable digital asset. The classification of Object 3 flows from the analysis of Object 2, the reserve portfolio, which determines whether holding USDC constitutes participation in a Riba-bearing financial structure under CoinStudy's HCS methodology. Object 1 is noted separately. Object 4 is addressed in the Chairman Ruling Note, consistent with the approach CoinStudy established in the USDT analysis.
CoinStudy's HCS analysis applies a two-stage process. Layer 1 screens for Sharia red lines. A red-line failure at Layer 1 ends the screening process and no Layer 2 score is assigned. This analysis does not reach Layer 2 scoring.
Ecosystem Riba Exposure: ❌ FAILED under CoinStudy's HCS structural-exposure methodology. The documented fact is that the USDC reserve portfolio (Object 2) holds, per Deloitte-attested data as of August 31, 2026, approximately 67.6% in Treasury repurchase agreements and approximately 18.0% in US Treasury securities, representing approximately 85.6% of the total reserve in interest-linked instruments as a matter of Circle's documented reserve management choices. CoinStudy's methodological rule is that material interest-linked reserve exposure in a token's reserve architecture constitutes an Ecosystem Riba Exposure red-line failure. Applying this rule to the documented reserve composition, the red line is triggered. No Layer 2 score is assigned.
USDC is one of the most transparent and institutionally backed digital dollar stablecoins in the market. Circle has established regulatory relationships, publishes SEC-filed financial disclosures, and reports reserve attestations by Deloitte. These are genuine institutional credentials that distinguish USDC from many other stablecoins.
CoinStudy's classification of USDC as Haram under its HCS methodology does not reflect any doubt about Circle's reliability, the authenticity of its reserves, or the stability of the peg. The classification reflects CoinStudy's application of its established Ecosystem Riba Exposure structural-exposure rule to the documented reserve portfolio. The same rule was applied to USDT in CoinStudy's earlier analysis.
Muslim investors should read the scholarly debate section carefully. Arguments exist on both sides of this question within Islamic finance, and CoinStudy's HCS Haram classification is its own framework-based conclusion rather than a universal fatwa. This distinction is maintained throughout this analysis.
The Ecosystem Riba Exposure red line is triggered at Layer 1. No Layer 2 HCS score is assigned, consistent with CoinStudy's established methodology for red-line failures.
The classification applies to Object 3, the USDC token, as a holdable digital asset under CoinStudy's structural exposure rule. The Chairman Ruling Note below addresses the separate scholarly framework for transactional use, consistent with the approach CoinStudy established for USDT.
USDC is a US dollar-pegged stablecoin issued by Circle Internet Financial, LLC and its affiliate Circle Internet Financial Europe SAS, subsidiaries of Circle Internet Group, Inc. The project was co-founded by Jeremy Allaire and Sean Neville. USDC is designed to maintain a one-to-one peg with the US dollar and is backed by a reserve portfolio that includes cash, short-term US Treasury securities, and Treasury repurchase agreements. USDC launched in September 2018 through a consortium structure called Centre, co-founded by Circle and Coinbase. Centre was later dissolved and Circle's subsidiaries became the sole issuers.
USDC is an ERC-20 token on Ethereum and is natively issued on more than a dozen additional blockchains including Solana, Base, Avalanche, and Polygon. Circle's Cross-Chain Transfer Protocol (CCTP) allows cross-chain movement of USDC without relying on a conventional third-party bridge for supported transfers.
USDC is designed to be redeemable one-for-one for US dollars through Circle's supported redemption arrangements. Direct redemption through Circle is subject to eligibility and account requirements and applies to Circle Mint customers. Many holders obtain dollars by transacting through exchanges or other intermediaries rather than directly through Circle.
According to CoinMarketCap research as of October 14, 2026, USDC has a circulating supply of approximately 73.04 billion tokens and a market capitalization of approximately $73.03 billion. Per Circle's Q2 2026 financial disclosures, USDC circulation stood at $73.3 billion with 19% year-over-year growth.
The GENIUS Act: Enacted July 2025, Framework Forthcoming
The Guiding and Establishing National Innovation for US Stablecoins Act, known as the GENIUS Act, was enacted in July 2025. The Act establishes a forthcoming federal regulatory framework for payment stablecoins with an expected effective date of January 18, 2027, or earlier if the specified final regulations trigger it sooner. The GENIUS Act specifies eligible reserve assets that include cash and demand deposits as well as short-maturity US Treasury securities and qualifying overnight repurchase agreements. Circle has described its reserve management as aligned with this forthcoming framework. CoinStudy's concern arises from Circle's actual reserve management choices, not from a claim that the Act requires every reserve asset to earn interest.
Reserve Composition: August 31, 2026
Per Deloitte-attested reserve data as of August 31, 2026, the USDC reserve portfolio holds approximately 67.6% in Treasury repurchase agreements, approximately 18.0% in US Treasury securities, and approximately 14.4% in cash and settlement adjustments. This data covers the full reserve portfolio and should be distinguished from the Circle Reserve Fund, which is a component of the overall reserve structure managed by BlackRock as a 2a-7 SEC-registered money market fund.
Circle Q2 2026 Financial Results
Per Circle's Q2 2026 financial disclosures, Circle generated $701 million in total revenue and reserve income. Circle reported approximately $668 million in reserve income, representing approximately 95% of total revenue. Reserve returns were 3.48% in Q2 2026, reflecting declining short-term Treasury yields.
Coinbase Revenue-Sharing Agreement Renewal: August 2026
Circle renewed its three-year USDC revenue-sharing agreement with Coinbase through 2029 per Circle's August 2026 public disclosures. Circle's revenue-sharing arrangement with Coinbase provides Coinbase with a substantial share of reserve income generated by USDC activity on its platform, with the specific calculation basis and deductions described in Circle's and Coinbase's SEC disclosures. This arrangement confirms that reserve interest income flows to Circle and its distribution partners rather than to ordinary USDC token holders.
Monthly Deloitte Attestations
USDC reserves are attested monthly by Deloitte, confirming that Circle's issuing entities hold sufficient reserve assets to back all USDC in circulation at each attestation date.
Circle Internet Financial, LLC and its affiliate Circle Internet Financial Europe SAS are the issuers of USDC per Circle's SEC filings, and Circle Internet Group, Inc. is their parent company. Under CoinStudy's adapted stock-screening assessment applying AAOIFI Standard 21 principles, the documented fact is that reserve income, which is interest earned on the assets backing USDC, represented approximately 95% of Circle's total Q2 2026 revenue of $701 million per Circle's financial disclosures. CoinStudy's adapted stock-screening threshold is below 5% of total revenue from interest or prohibited income sources. Circle's interest income as a proportion of total revenue far exceeds this threshold. This is CoinStudy's adapted stock-screening assessment and does not constitute an official AAOIFI determination. Muslim investors considering CRCL stock should seek individual scholarly guidance.
The USDC reserve portfolio is the pool of assets held to back every USDC token in circulation. Per Deloitte attested reserve data as of August 31, 2026, the portfolio holds approximately 67.6% in Treasury repurchase agreements, approximately 18.0% in US Treasury securities, and approximately 14.4% in cash and settlement adjustments.
The documented fact is that Treasury repurchase agreements and US Treasury securities are interest-bearing instruments: they pay interest to their holder, which is Circle through its reserve management structure. Per Circle's Q2 2026 financial disclosures, Circle reported approximately $668 million in reserve income in Q2 2026 alone.
The reserve income accrues to Circle and its distribution partners, not to USDC token holders.
The USDC token is a digital instrument representing access to USDC's redemption and stability framework, backed by the reserve portfolio described above. Redemption is available one-for-one for US dollars through Circle's supported arrangements, subject to account eligibility for direct redemption access.
The documented fact is that the reserve portfolio backing every USDC token holds approximately 85.6% of its assets in interest-linked instruments per August 31, 2026 Deloitte attested data.
CoinStudy's methodological rule is that material interest-linked reserve exposure in a token's native reserve architecture constitutes an Ecosystem Riba Exposure red-line failure at Layer 1, triggering a Haram classification under the HCS methodology. This is a structural assessment of the token's reserve architecture rather than a determination that the individual token holder personally receives or benefits from interest income.
CoinStudy's framework-based conclusion, applying this rule to the documented reserve composition, is that the red line is triggered. Whether this structural reserve exposure makes holding the token impermissible under Islamic commercial law more broadly is a question on which arguments exist on both sides within contemporary Islamic finance, addressed below.
CoinStudy presents the arguments found in the broader Islamic finance debate on stablecoin permissibility honestly. The positions below represent arguments documented in available Islamic finance research rather than a claimed consensus of named scholars, as the debate remains active and no single authoritative ruling has been universally adopted.
The permissibility argument: Arguments for treating USDC as permissible for payment use typically rely on two observations, both documented in halal finance research sources including Halal Wallet's published stablecoin analysis. First, the documented fact that USDC token holders receive no interest income: reserve income accrues entirely to Circle and its distribution partners. Second, USDC functions as a medium of exchange for permissible transactions, and using it in such a transaction does not require the user to have a direct financial relationship with the reserve portfolio's investment choices. On this view, a Muslim using USDC to pay for halal goods is not engaging in Riba any more than a person using a conventional bank account whose deposits are invested by the bank without passing interest to the depositor.
The non-permissibility argument: Arguments for treating USDC as impermissible focus on the structural character of the token's reserve architecture, a framework consistent with CoinStudy's established Ecosystem Riba Exposure methodology and with its Chairman ruling on USDT. When a Muslim holds USDC, they hold a position backed by a portfolio that earns interest income. Even if the holder does not receive that income, the deposited value is the vehicle through which interest is generated and through which Circle's interest-dependent business model is sustained. The token is not analogous to cash: it is a claim supported by an interest-bearing reserve structure, and holding it involves participation in and enablement of that structure regardless of whether the holder personally receives interest.
CoinStudy's position: The documented fact is that the reserve portfolio holds approximately 85.6% of its assets in interest-linked instruments per August 31, 2026 Deloitte-attested data. CoinStudy's methodological rule is that this level of interest-linked reserve exposure triggers the Ecosystem Riba Exposure red line at Layer 1. CoinStudy's framework-based conclusion is therefore Haram under its HCS methodology. This is not a universal fatwa and is not presented as the only valid position within Islamic scholarship. Muslim investors whose individual scholarly guidance takes the permissibility position may hold USDC consistent with that guidance while being informed of CoinStudy's own finding.
USDC and USDT have different reserve disclosures and portfolio compositions. CoinStudy applies the same Ecosystem Riba Exposure red-line test to both, assessing each issuer's documented reserve structure independently. USDC is substantially more transparent than USDT, with monthly Deloitte attestations and SEC-filed disclosures, but transparency about a reserve structure does not change CoinStudy's methodological assessment of the structural character of that reserve. Both trigger the red line under CoinStudy's methodology, though the specific reserve compositions differ and each requires independent assessment of its own documented data.
CoinStudy's Chairman, Dr. Usman Quddus, PhD in Islamic Studies & Finance, has previously ruled in the USDT analysis that use as digital currency is permissible with conditions, as a distinct ruling from the HCS token classification. This ruling reflects the scholarly tradition of distinguishing between the permissibility of holding or investing in a financial instrument and the permissibility of using it as a medium of exchange in a specific permissible transaction.
CoinStudy applies the same separate-framework recognition to USDC. The HCS token classification concerns the permissibility of holding USDC as a digital asset under CoinStudy's structural-exposure rule. The separate transactional use question falls within a different scholarly framework that different scholars may assess differently. Muslim investors and users who need individual guidance on transactional USDC use should consult a qualified Islamic scholar for a ruling specific to their situation.
Under CoinStudy's HCS structural-exposure methodology, holding USDC as a digital asset in a portfolio or on an exchange is not consistent with the HCS standard. This does not mean that every individual use of USDC in every context carries the same ruling: the Chairman Ruling Note above addresses the separate transactional use question.
USDC-denominated yield products, lending programs, and Earn features that pay returns to USDC holders involve additional layers of concern beyond the reserve portfolio question and are impermissible on multiple bases.
CRCL stock is not consistent with CoinStudy's adapted AAOIFI Standard 21 stock-screening assessment due to reserve interest income representing approximately 95% of total Q2 2026 revenue per Circle's financial disclosures. This is CoinStudy's adapted assessment, not an official AAOIFI determination. Muslim investors should seek individual scholarly guidance.
Muslim investors who currently hold USDC should seek guidance from a qualified Islamic scholar about their specific situation, including any purification obligations that may apply.
Under CoinStudy's HCS structural-exposure methodology, USDC is classified as Haram ❌.
The Ecosystem Riba Exposure red line is triggered at Layer 1. No Layer 2 score is assigned.
The documented facts are as follows. The USDC reserve portfolio as of August 31, 2026 holds approximately 67.6% in Treasury repurchase agreements and approximately 18.0% in US Treasury securities per Deloitte-attested data, representing approximately 85.6% of the total reserve in interest-linked instruments as a result of Circle's management choices. Circle reported approximately $668 million in reserve income in Q2 2026 per Circle's financial disclosures, representing approximately 95% of total revenue.
CoinStudy's methodological rule is that material interest-linked reserve exposure in a token's reserve architecture triggers the Ecosystem Riba Exposure red line. CoinStudy's framework-based conclusion, applying this rule to the documented reserve data, is Haram under its HCS methodology. This is not a universal fatwa. Arguments exist on both sides of this question within Islamic finance, and Muslim investors should read the scholarly debate section and seek individual scholarly guidance for their own situation.
The transactional use of USDC is a separate question addressed through the Chairman Ruling Note.
Read detailed analysis and concepts here:
Is Crypto Trading Halal?
Is Ethereum Halal?
Understanding Gharar in Crypto
Market Volatility vs Gharar in Islam
Real Risks of Haram Crypto Projects
Disclaimer: This analysis is provided for educational and research purposes only based on guidance from CoinStudy's HCS Shariah Board. The Haram classification is CoinStudy's framework-based conclusion applying the Ecosystem Riba Exposure structural-exposure rule to the documented reserve architecture. It is not a universal fatwa. Transactional use of USDC involves a separate scholarly framework addressed in the Chairman Ruling Note. CRCL stock screening is CoinStudy's adapted assessment, not an official AAOIFI determination. CoinStudy does not issue personal fatwas or financial advice. Please consult a qualified Islamic scholar for individual guidance.
Authoritative ruling from the Chairman of the CoinStudy Sharia Board.
"Scholars have differing opinions regarding USDT and other fiat-backed stablecoins. Some scholars consider it impermissible and some consider it permissible. According to our research, its use is permissible. Its backend structure and currency leveling method is not interest in totality, however caution is necessary due to the presence of interest-based transactions within it. There is also an element of Gharar in that it is not certain that there is a dollar behind every unit. Despite this, its use as a digital currency is correct. If it is used in halal means the profit will be halal, and if it is used in haram dealings it will be haram."
CoinStudy's assessment based on this ruling:
Dr. Usman Quddus issued this ruling for USDT and all other structurally similar fiat-backed stablecoins. USDC qualifies as structurally similar because its peg mechanism, reserve composition, and economic function are directly comparable to USDT. Both are dollar-pegged stablecoins whose reserves consist of cash, short-duration US Treasury securities, and similar instruments that generate interest income for their issuers. The chairman's ruling therefore applies to USDC in full.
There is however one important distinction between USDT and USDC that Muslim investors should understand when reading this ruling in the USDC context.
USDC is issued by Circle, which is a publicly audited company with monthly reserve attestations published by third-party accounting firms. The reserve composition is disclosed with considerably more transparency than Tether's historical disclosures. The chairman specifically identified a Gharar concern in USDT that it is not certain there is a dollar behind every unit. USDC's reserve transparency and independent attestation partially address this specific Gharar concern, though the interest-bearing nature of the reserve instruments remains identical between both stablecoins.
This means USDC's compliance profile is structurally the same as USDT at the reserve level, interest-bearing instruments backing the peg with caution required, but the Gharar concern the chairman identified is somewhat reduced by Circle's more robust reserve disclosure practices. CoinStudy reflects this marginal difference in the respective scores while maintaining the same structural assessment for both instruments.
The operative conclusion of the ruling is the same for USDC as it is for USDT. Using USDC purely as a digital medium of exchange for permissible transactions is correct under the chairman's ruling. Depositing USDC into lending protocols to earn yield, holding USDC in interest-distributing accounts, or using USDC in any way that generates returns from its interest-bearing reserve structure remains impermissible and falls outside the scope of what the chairman's ruling permits.
CoinStudy's structural Haram classification remains unchanged for USDC as an instrument, reflecting the interest-bearing reserve structure and the Gharar elements the chairman identified. The chairman's ruling adds the scholarly position that despite these structural concerns, use as a pure medium of exchange in halal transactions is permissible under his assessment. Muslim investors who want complete certainty should consult their own qualified Islamic scholar given the genuine scholarly disagreement on this question that the chairman himself acknowledged.
Guaranteed Interest
No guaranteed interest obligations
Synthetic Interest Products
No synthetic interest instruments
3 Red Lines Failed
This asset is automatically classified as HARAM.
Is Ethena USDe halal?
USDE · HCS 0 · Haram
