Circle Internet Group’s (CRCL) final approval from the Office of the Comptroller of the Currency to establish First National Digital Currency Bank is a positive milestone, but investors may be overestimating its significance, according to Japanese investment bank Mizuho.
“While a positive development, we believe the market reaction is likely overly optimistic, as this does not resolve fundamental issues that have been hurting the stock of recent,” analysts led by Dan Dolev said in the Friday report.
Shares of the stablecoin issuer closed 5% higher on Friday following the news. The stock on Monday has given back most of those gains, trading 4.7% lower at $63.03 at publication time.
Mizuho reiterated its neutral rating, arguing that the regulatory approval does not resolve the fundamental issues weighing on the stock.
Those challenges include a decline in $USDC’s market capitalization since March 2026, which the bank said raises questions about the stablecoin’s growth trajectory.
Circle’s $USDC stablecoin has faced headwinds in recent months, with its circulating supply falling by roughly $7 billion from its March peak to about $74 billion in July as redemptions outpaced new issuance. The contraction marks the largest monthly decline since 2022 and has raised concerns among analysts that slowing supply growth could weigh on the firm’s transaction and reserve-income outlook, even as on-chain usage remains strong
The stablecoin market posted its largest monthly contraction in years in June, signaling an outflow of on-chain liquidity as crypto markets remained stuck near their 2026 lows.
The analysts also highlighted increasing competitive pressure from Open USD, a newly launched, GENIUS Act-compliant dollar-backed stablecoin developed by a consortium of more than 140 financial and technology companies, including Mastercard (MA), Stripe and Coinbase (COIN).
According to Mizuho, the emergence of consortium-backed stablecoins underscores the risk that the sector becomes increasingly commoditized, making it more difficult for Circle to sustain its competitive position despite securing a national trust bank charter.
“We remain on the sidelines,” the report added.