Circle stock dips despite OCC win as USDC supply shrinks $7B

Mizuho reiterated a neutral rating on Circle on Friday, telling clients that the company's final OCC approval to launch First National Digital Currency Bank is a positive milestone but doesn't resolve the fundamentals weighing on the stock. The Japanese bank said the market's initial reaction looked overly optimistic, given USDC's contracting supply and a fresh wave of competition from a consortium-backed rival.

Shares of Circle (CRCL) closed 5% higher on Friday after the OCC announcement, then gave back most of the move on Monday, trading 4.7% lower at $63.03. Analysts led by Dan Dolev said the charter helps credibility but does little to address the issuance slowdown that drives Circle's core revenue.

Why it matters

USDC's circulating supply has fallen roughly $7 billion from its March peak to about $74 billion in July, the largest monthly contraction since 2022. Redemptions have outpaced new issuance, and the broader stablecoin market posted its biggest monthly drop in years in June as on-chain liquidity thinned near 2026 lows. A shrinking float pressures both transaction-based fees and the reserve-income stream that underpins Circle's earnings.

The other overhang is structural. Open USD, a GENIUS Act-compliant dollar stablecoin backed by a consortium of more than 140 financial and technology firms including Mastercard, Stripe, and Coinbase, is now live. Mizuho argues that kind of coalition-backed issuance points to a future in which dollar stablecoins look increasingly interchangeable, making it harder for Circle to defend pricing power on the asset that anchors its business.

Market impact

Mizuho's call frames the trust bank charter as table stakes rather than a moat. The analysts kept their rating at neutral and wrote that they "remain on the sidelines," a sign they want to see USDC supply stabilize and competitive pressure from Open USD resolve before turning constructive. For CRCL holders, the trade now depends less on regulatory milestones and more on whether USDC can stabilize its float and defend share against a consortium that combines payments, banking, and exchange distribution in one stack.