Mizuho analysts warned that Circle still faces core business pressure even after receiving approval from the Office of the Comptroller of the Currency. The firm said USDC’s circulating supply has fallen by about $7 billion from its March peak to around $74 billion in July, with redemptions outpacing new issuance. Mizuho described the move as the sharpest monthly contraction for USDC since 2022.
USDC contraction limits the impact of regulatory news
According to the report, the drop in USDC reflects broader market weakness and softer demand for dollar-backed stablecoins. The wider stablecoin market also recorded its steepest monthly decline in years during June, while on-chain liquidity fell and crypto prices hovered near 2026 lows.
Circle’s stock reaction was brief. Shares rose 5% on Friday after news of the OCC approval, but by Monday they had fallen 4.7% to $63.03, wiping out most of the earlier gain. Mizuho kept its neutral rating on the company and said the main issues tied to market structure, slower USDC growth, and competitive risk remain in place.
Open USD raises the competitive stakes
Mizuho also pointed to Open USD as a growing threat. The recently launched stablecoin is designed to comply with the GENIUS Act and is backed by a consortium of more than 140 financial technology companies. Participants include Mastercard, Stripe, and Coinbase, a lineup that Mizuho believes could add pressure to Circle’s market position.
In Mizuho’s view, consortium-backed stablecoins could make the sector more commoditized over time. That would make it harder for single issuers such as Circle to stand apart. The analysts said Circle’s national trust bank charter may help on the regulatory side, but it may not be enough to preserve a clear competitive edge as the market changes.
Circle faces a tougher phase in the stablecoin market
Circle Internet Group, founded in 2013, is best known for USDC, one of the leading dollar-backed stablecoins in the market. Mizuho said the sector now appears to be moving into a transition period shaped by new rules and product innovation. For Circle, the immediate challenge is not only regulatory execution, but also the combination of slower growth, rising competition, and broader market volatility.