TLDR
- Circle received final OCC approval to establish First National Digital Currency Bank, a national trust bank
- CRCL stock rose 5% on the news Friday, then dropped 4.7% to $63.03 on Monday
- Mizuho kept its Neutral rating, warning the approval doesn’t fix slowing USDC growth or rising competition
- USDC circulating supply has fallen roughly $7 billion from its March peak to around $74 billion
- Baird cut its price target on CRCL from $138 to $100, while keeping its Outperform rating
Circle Internet Group (CRCL) got its regulatory win last week. The market’s enthusiasm didn’t last long.
Circle received final approval from the Office of the Comptroller of the Currency to establish First National Digital Currency Bank. The stock jumped 5% on Friday following the announcement. By Monday, it had given back nearly all of those gains, trading down 4.7% to $63.03.
The muted follow-through reflects a broader skepticism on Wall Street about what the bank charter actually fixes.
Mizuho, which maintained a Neutral rating on CRCL with an $85 price target, put it bluntly: “While a positive development, we believe the market reaction is likely overly optimistic, as this does not resolve fundamental issues that have been hurting the stock of recent.”
The bank charter allows Circle to operate under direct federal oversight, focusing on digital asset custody, reserve management, and fiduciary services. That part is straightforward. The bigger question is what’s happening to USDC itself.
USDC Supply Under Pressure
USDC’s circulating supply has dropped by roughly $7 billion from its March 2026 peak to around $74 billion in July. That marks the largest monthly contraction since 2022, with redemptions outpacing new issuance.
The stablecoin market overall saw its largest monthly contraction in years in June, as crypto markets stayed near their 2026 lows. On-chain usage remains strong, but shrinking supply puts pressure on Circle’s transaction and reserve-income outlook.
Mizuho flagged this directly, saying the decline in USDC’s market cap since March raises real questions about the stablecoin’s growth trajectory.
New Competition Adds to the Pressure
The competitive picture has also shifted. Open USD, a newly launched stablecoin compliant with the GENIUS Act, was developed by a consortium of more than 140 financial and technology companies, including Mastercard, Stripe, and Coinbase.
Mizuho warned this raises the risk that the stablecoin sector becomes increasingly commoditized, making it harder for Circle to hold its position even with a national trust bank charter.
“We remain on the sidelines,” the analysts wrote.
Baird took a different view on the longer-term case, but still trimmed its price target from $138 to $100. The firm kept its Outperform rating, citing Circle’s first-mover advantage as a GENIUS-compliant stablecoin issuer and growing stablecoin use cases as supporting factors.
Baird expects Q2 revenue to come in slightly below Wall Street estimates, though EBITDA is projected to meet consensus. The firm left its 2027 EPS estimates unchanged, pointing to lower USDC levels being offset by higher reserve rates.
Wolfe Research maintained an Underperform rating with a $65 price target.
CRCL is down 65% over the past year. The stock was trading at $63.00 as of the latest data.
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