Mizuho Lowers Circle's Rating to Underperform, Adjusts Price Target to $50 Amid Open USD Concerns

Finance Mizuho Lowers Circle's Rating to Underperform, Adjusts Price Target to $50 Amid Open USD Concerns

The Japanese investment bank indicated that the yield pass-through model of Open USD could adversely affect Circle's margins by reallocating more reserve income to distributors.

By Will Canny, AI Boost| Edited by Cheyenne Ligon Jul 14, 2026, 4:59 p.m. 2 min read Make preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on

Jeremy Allaire, Co-Founder, Chairman and CEO. (HK Fintech Week)

Summary

• Mizuho has downgraded Circle from neutral to underperform and reduced its price target from $85 to $50 due to increasing competition from OpenUSD.
• The firm believes OpenUSD's model may compel Circle to distribute a larger share of reserve income to its partners, thereby squeezing profit margins.
• Mizuho has revised its 2027 adjusted EBITDA forecast for Circle to $699 million, approximately 25% below Wall Street's consensus estimate.

The Japanese investment bank Mizuho has reduced Circle's rating from neutral to underperform and lowered its price target to $50 from $85, citing concerns that OpenUSD's business model could jeopardize the long-term profitability of the stablecoin issuer.

At the time of this report, Circle's shares were down 0.6% to $62.63.

Open USD, a dollar-backed stablecoin launched on June 30 by the Open Standard consortium, "could significantly impact CRCL's business model, which depends on retaining a substantial portion of the treasury yield to generate revenue," analysts led by Dan Dolev noted in a client letter.

The consortium includes over 140 partners, such as Mastercard (MA), Stripe, Coinbase (COIN), and BlackRock (BLK).

Recently, USDC has experienced a decline in circulation, dropping to approximately $73 billion from nearly $80 billion in March, reflecting a broader contraction of about $10 billion in the stablecoin sector since May amid reduced crypto trading activity and intensified competition from newly regulated entrants.

In contrast to Circle's USDC, which retains reserve income before sharing it with partners like Coinbase and Binance, Open USD adopts a model where it collects a minimal operating fee while redistributing most reserve income to its issuers and distributors, according to the analysts.

This approach might lead Circle's distribution partners to seek a larger portion of reserve income over time, especially as Circle is set to renegotiate its revenue-sharing deal with Coinbase, its primary partner, in August.

Coinbase's backing of OpenUSD could enhance its bargaining power, the report suggested.

In light of these risks, Mizuho has increased its projection for Circle's distribution and transaction expenses for 2027 to 73% from 64%, subsequently reducing its adjusted EBITDA estimate to $699 million from $1.09 billion, which is about 25% lower than the analyst consensus of $941 million.

Although the bank now anticipates slightly higher interest rates in 2027 compared to previous forecasts, it stated that increased reserve yields would not sufficiently counterbalance pricing pressures.

Circle is also facing additional challenges. According to a Tuesday report from JPMorgan, the partnership with Hyperliquid creates a "prisoner's dilemma" that could negatively affect profits from the dollar-pegged stablecoin.

Read more: JPMorgan says Hyperliquid's rise threatens Circle's USDC economics

CircleStablecoins AI Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk's full AI Policy.