Japanese investment bank Mizuho downgraded Circle (CRCL) to underperform from neutral and cut its price target to $50 from $85, arguing that OpenUSD’s business model threatens the stablecoin issuer’s long-term financials.
Circle shares were trading 0.6% lower at $62.63 at press time.
Open USD, a dollar-backed stablecoin unveiled on June 30 by the Open Standard consortium, “could fundamentally change CRCL’s business model, which relies on retaining a large portion of Treasury yields to drive revenue,” analysts led by Dan Dolev said in Tuesday’s note to clients.
The consortium counts more than 140 partners, including Mastercard (MA), Stripe, Coinbase (COIN) and BlackRock (BLK).
The USDC has also lost momentum in recent months, with its circulating supply falling to around $73 billion from nearly $80 billion in March. The drop comes as the stablecoin market has shrunk by about $10 billion since May amid softer crypto trading activity and growing competition from newly regulated issuers.
Unlike Circle’s USDC model, which captures reserve revenue before sharing a portion with partners like Coinbase and Binance, Open USD charges a small operating fee and distributes most reserve revenue to issuers and distributors, the analysts said.
