Mizuho: Circle bank approval does not resolve USDC growth issues

Circle Internet Group received final approval from the Office of the Comptroller of the Currency to establish First National Digital Currency Bank, but Mizuho believes the market is overly optimistic about its significance. Analysts led by Dan Dolev stated that this approval does not address fundamental issues affecting the stock. Following the news, shares of Circle rose 5% on Friday but fell 4.7% to 63.03 dollars by Monday. Mizuho maintained a neutral rating, citing a decline in USDC's market capitalization since March 2026 as a concern for its growth trajectory. USDC's circulating supply dropped by approximately 7 billion dollars from its March peak to about 74 billion dollars in July, marking the largest monthly decline since 2022. This contraction raises concerns about the firm's transaction and reserve-income outlook, despite strong on-chain usage. The stablecoin market experienced its largest monthly contraction in years in June, indicating an outflow of liquidity. Additionally, competitive pressure is increasing from Open USD, a new dollar-backed stablecoin developed by over 140 companies, including Mastercard, Stripe, and Coinbase. Mizuho warns that the rise of consortium-backed stablecoins could commoditize the sector, making it harder for Circle to maintain its competitive edge.

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