Wall Street Turns Cold on Circle — What It Means for Your USDC Stash
Two big banks just cut their outlook on Circle, the company behind USDC, warning a rival stablecoin could squeeze its profits and yours.
If you hold USDC, the stablecoin that’s supposed to always be worth exactly one dollar, you might not think much about who profits behind the scenes. But this week, two major Wall Street banks — Mizuho and JPMorgan — sent a clear signal that the business model powering USDC is under real strain, and that matters for the company keeping it stable.
Mizuho downgraded Circle, the firm behind USDC, from “neutral” to “underperform” and slashed its price target on Circle’s stock (CRCL) to $50 from $85. JPMorgan separately cut its own estimates for both Circle and Coinbase. Circle shares dipped modestly on the news, trading around $62.63, roughly 0.6% lower.
What’s actually spooking these banks?
The culprit is a new stablecoin called Open USD, launched June 30 by a group calling itself the Open Standard consortium. This isn’t a small startup project — the consortium already counts more than 140 partners, including heavyweights like Mastercard, Stripe, BlackRock, and even Coinbase, which is also one of Circle’s key partners.
Here’s the plain-English version of why that’s a threat. When you hold USDC, Circle takes the cash and government bonds backing it and earns interest (yield) on that money. Circle keeps a large chunk of that yield for itself before sharing some with distribution partners like Coinbase and Binance. Open USD flips that model: it charges only a small operating fee and hands most of the reserve income straight to issuers and distributors instead of keeping it in-house.
Mizuho analysts, led by Dan Dolev, warned that Open USD’s approach “could fundamentally alter CRCL’s business model, which relies on retaining a large portion of the treasury yield to drive revenues.” In other words, if partners can get a better deal elsewhere, they may pressure Circle to hand over more of its own earnings just to stay competitive — squeezing profits at the core of the business.
The numbers behind the worry
Mizuho now projects Circle’s adjusted earnings (EBITDA) for 2027 at $699 million — about 25% below what Wall Street had been expecting. The bank also flagged that an upcoming renewal of Circle’s revenue-sharing deal with Coinbase could pile on further pressure.
There’s also a demand-side wobble. USDC’s circulating supply has slipped to around $73 billion, down from nearly $80 billion back in March. That tracks with a broader shrinking of the stablecoin market — roughly $10 billion smaller since May — as crypto trading activity has cooled and newly regulated stablecoin issuers enter the field.
Why this matters for everyday crypto holders
For most people, USDC’s dollar peg isn’t at risk here — this is a story about who profits from stablecoins, not whether they’re safe to hold. But it’s a reminder that stablecoins aren’t just neutral cash substitutes; they’re businesses competing for market share, and that competition can reshape which coins exchanges and apps prefer to support.
If Open USD’s model catches on with big-name backers like Mastercard, Stripe, and BlackRock, it could pull liquidity and partnerships away from USDC over time. That wouldn’t necessarily hurt your dollar-for-dollar redemption today, but it’s worth watching if you rely on USDC for savings, payments, or trading — the landscape underneath your “boring” stablecoin is shifting faster than it looks.
Read more: JPMorgan Says a New USDC Deal Could Squeeze Circle and Coinbase Profits
