Japanese investment bank Mizuho reaffirmed its neutral stance on Circle Internet Group after the US Office of the Comptroller of the Currency granted final approval for Circle’s First National Digital Currency Bank. While the regulatory approval marks a significant step for Circle, Mizuho indicated that the move does not resolve key challenges facing the stablecoin issuer.
USDC faces declining market capitalization
Mizuho analysts, led by Dan Dolev, highlighted Circle’s continuing struggle with the shrinking circulation of its USDC stablecoin. According to the team, USDC’s circulating supply dropped by approximately $7 billion from its March peak, settling near $74 billion in July, as redemptions outpaced new issuance. This marks the largest monthly contraction since 2022, reflecting broader market conditions and reduced demand for dollar-backed tokens.
The decline contributed to a limited rise in Circle’s share price. After gaining 5% on Friday amid news of the OCC approval, shares retreated 4.7% to $63.03 by Monday, erasing most of the initial gains. Mizuho maintained its neutral rating, noting that Circle’s core issues, such as stablecoin market dynamics and competitive risks, remain unresolved despite the regulatory breakthrough.
While Mizuho’s analysts acknowledged the OCC approval as a positive development, they questioned whether the market’s optimism accurately reflects underlying business challenges, particularly the stagnant growth trajectory of USDC amid market headwinds.
The wider stablecoin market also experienced its steepest monthly contraction in years during June, with overall on-chain liquidity falling as cryptocurrency prices hovered near 2026 lows.
Competition from consortium-backed stablecoins
Circle now faces intensified competition from new entrants, notably Open USD—a recently launched, GENIUS Act-compliant stablecoin backed by a consortium of over 140 financial technology companies. Major firms such as Mastercard, Stripe, and Coinbase have joined this initiative, which Mizuho believes could exert additional pressure on Circle’s market position.
The emergence of Open USD demonstrates industry efforts to create more secure, compliant, and widely accepted stablecoins. Mizuho suggested that as consortium-based stablecoins proliferate, the sector could become increasingly commoditized, making differentiation more difficult for individual issuers like Circle.
Mini dictionary: GENIUS Act, short for Guidelines for Ensuring the Neutral and Inclusive Use of Stablecoins, is a legislative framework in the US aimed at establishing standards for stablecoin issuance and oversight to ensure security, transparency, and regulatory compliance.
The entry of Open USD signals a more competitive environment for stablecoin issuers. Mizuho argued that Circle’s recently secured national trust bank charter may not be sufficient to maintain its competitive edge as the stablecoin landscape evolves.
| Stablecoin | Backers | Key Features | Circulating Supply (July 2026) |
|---|---|---|---|
| USDC | Circle | Fully backed, transparent, long-time market presence | ~$74 billion |
| Open USD | Consortium (Mastercard, Stripe, Coinbase, etc.) | GENIUS Act-compliant, consortium-governed | N/A (recently launched) |
Industry outlook and ongoing challenges
Circle Internet Group, founded in 2013, is known primarily for its USDC stablecoin, which has become one of the top dollar-backed tokens in the industry. However, the recent competitive dynamics and ongoing market contraction point to growing challenges for standalone stablecoin providers.
Mizuho concluded that while regulatory progress is notable, investors should recognize the persistent risks posed by slowing growth, increased competition, and broader market volatility.
Mizuho’s report indicated that the stablecoin sector may be entering a transition phase, with new regulatory standards and product innovations shaping future competition and sustainability.
