CoinDesk
Mizuho downgraded Circle (CRCL) to underperform from neutral on Tuesday, cutting its price target to $50 from $85 on the view that OpenUSD's revenue model threatens the economics underpinning USDC. Analysts led by Dan Dolev argued that OpenUSD's pass-through structure, which forwards most reserve income to issuers and distribution partners, could force Circle to surrender a larger share of its treasury-yield economics over time.
The Japanese bank now models 2027 distribution and transaction costs at 73% of revenue, up from 64%, pulling its adjusted EBITDA forecast down to $699 million from $1.09 billion. That figure lands roughly 25% below Wall Street consensus of $941 million. Even higher assumed interest rates were not enough to offset the pricing pressure in Mizuho's model.
Why it matters
OpenUSD was unveiled on June 30 by the Open Standard consortium, whose 140-plus partners include Mastercard, Stripe, Coinbase and BlackRock. Unlike USDC, which retains a large slice of reserve income before distributing a portion to partners like Coinbase and Binance, OpenUSD charges a small operating fee and returns most of the yield to issuers and distributors. Mizuho's read is that this template, endorsed by the same distributors Circle depends on, gives those counterparties leverage to renegotiate Circle's own revenue-sharing splits upward. Coinbase's stated support for OpenUSD strengthens that hand ahead of an August renegotiation of Circle's largest distribution agreement.
The call lands against a softer stablecoin market: USDC's circulating supply has slipped to roughly $73 billion from nearly $80 billion in March, and the broader stablecoin complex has shrunk by about $10 billion since May as crypto trading volume cools and freshly regulated issuers add supply.
Market impact
Circle shares traded 0.6% lower at $62.63 at publication, well above the new $50 target. JPMorgan also flagged pressure this week, warning that Hyperliquid's Circle-and-Coinbase integration creates a prisoner's dilemma on USDC economics.
Frequently asked questions
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Why did Mizuho cut Circle's price target to $50?
Mizuho analysts led by Dan Dolev argued that OpenUSD's pass-through yield model gives distribution partners leverage to renegotiate Circle's revenue-sharing splits, structurally compressing the margins on USDC's reserve income.
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What is OpenUSD and how does it differ from USDC?
OpenUSD is a dollar-backed stablecoin unveiled June 30 by the Open Standard consortium, which counts Mastercard, Stripe, Coinbase and BlackRock among 140-plus partners. It charges a small operating fee and forwards most reserve income to issuers and distributors, while USDC retains a larger share before sharing.
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How big is the EBITDA cut in Mizuho's new model?
Mizuho cut its 2027 adjusted EBITDA forecast for Circle to $699 million from $1.09 billion, roughly 25% below Wall Street consensus of $941 million. It raised its 2027 distribution and transaction cost ratio to 73% from 64%.
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Why is the August Coinbase deal a catalyst for CRCL?
Circle's largest revenue-sharing agreement, with Coinbase, is up for renegotiation in August. Coinbase's public support for OpenUSD strengthens its position to demand a larger share of reserve income, per Mizuho.
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Why is USDC supply shrinking right now?
USDC's circulating supply has slipped to about $73 billion from nearly $80 billion in March. The broader stablecoin market has shed roughly $10 billion since May as crypto trading cooled and newly regulated issuers added supply.
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