Mizuho says Circle bank approval doesn't solve USDC growth, stablecoin competition risks
Japanese investment bank Mizuho reiterated its neutral rating on Circle, saying OCC approval for a national trust bank doesn't address slowing USDC growth or rising competition.
Intelligence analysis by Llama
Mizuho said Circle's final OCC approval for a national trust bank is a positive step but doesn't address the company's core challenges, including a decline in USDC's market capitalization since March and increasing competitive pressure from Open USD.
Circle, a company that makes a stablecoin called USDC, got approval from a US bank regulator. However, this approval doesn't solve the problems that Circle is facing, such as a decline in the value of USDC and increasing competition from other stablecoins.
Analysis
A $60B Vote of Confidence
Circle's (CRCL) final approval from the Office of the Comptroller of the Currency to establish First National Digital Currency Bank is a positive milestone, but investors may be overestimating its significance, according to Japanese investment bank Mizuho. The bank pointed to USDC's declining market capitalization since March as a key concern. The report also warned that Open USD, a new consortium-backed stablecoin, could accelerate competition and pressure Circle's business.
Why Cursor?
Mizuho reiterated its neutral rating, arguing that the regulatory approval does not resolve the fundamental issues weighing on the stock. Those challenges include a decline in USDC's market capitalization since March 2026, which the bank said raises questions about the stablecoin's growth trajectory. Circle's USDC stablecoin has faced headwinds in recent months, with its circulating supply falling by roughly $7 billion from its March peak to about $74 billion in July as redemptions outpaced new issuance.
The Road Ahead
The analysts also highlighted increasing competitive pressure from Open USD, a newly launched, GENIUS Act-compliant dollar-backed stablecoin developed by a consortium of more than 140 financial and technology companies, including Mastercard (MA), Stripe and Coinbase (COIN). According to Mizuho, the emergence of consortium-backed stablecoins underscores the risk that the sector becomes increasingly commoditized, making it more difficult for Circle to sustain its competitive position despite securing a national trust bank charter.
Key points
- Circle's final approval from the Office of the Comptroller of the Currency to establish First National Digital Currency Bank is a positive milestone.
- The approval does not resolve fundamental issues weighing on Circle's stock, including a decline in USDC's market capitalization and increasing competitive pressure from Open USD.
- Mizuho reiterated its neutral rating on Circle, arguing that the regulatory approval does not resolve the fundamental issues weighing on the stock.
If Circle can find ways to increase the adoption of USDC and reduce the competition from other stablecoins, it could potentially lead to an increase in the value of the company's stock.
If Circle is unable to address the decline in the value of USDC and the increasing competition from other stablecoins, it could potentially lead to a decrease in the value of the company's stock and a loss of market share.
