Mizuho Downgrades Circle on OpenUSD Pressure

Mizuho says OpenUSD could squeeze Circle’s margins as the stablecoin market moves toward shared governance and revenue sharing. The bank also expects higher distribution costs and less leverage in talks with Coinbase.

Key Takeaways

• Mizuho downgraded Circle to underperform and cut its price target from $85 to $50.
• The bank sees OpenUSD as a threat to Circle's business model because of higher distribution costs and lower margins.
• Mizuho lowered its 2027 EBITDA estimate and warned about pressure in talks with Coinbase.

Mizuho has downgraded Circle to underperform and lowered its price target from $85 (€75) to $50 (€44). The Japanese investment bank says OpenUSD is becoming a more serious challenge to the stablecoin issuer's business model as competition in the dollar-token market intensifies.

OpenUSD Puts Pressure on the Model

Analyst Dan Dolev said OpenUSD's pass-through structure could reshape how Circle earns and shares reserve income. Rather than keeping most of the revenue from Treasury bills, Circle may have to pass a larger share along to distribution partners, which would weigh on margins.

OpenUSD was unveiled on June 30 by the Open Standard consortium, which counts more than 140 partners, including Mastercard, Stripe, Coinbase, and BlackRock. That lineup suggests the stablecoin market is moving toward a model built more around shared governance and revenue sharing, rather than a single issuer controlling most of the economics.

Lower Outlook for Circle

Mizuho cut its 2027 estimate for Circle's adjusted EBITDA to $699 million (€613 million). The bank said that figure sits about 25 percent below Wall Street consensus of $941 million (€825 million). It also lifted its estimate for distribution and transaction costs to 73 percent from 64 percent.

The timing matters, since Circle is set to renegotiate its revenue-sharing agreement with Coinbase, its largest distribution partner, in August. Mizuho warned that Coinbase's backing of OpenUSD could leave Circle with less room to negotiate. The bank also said higher interest rates in 2027 would not be enough to make up for the pricing pressure.

Why This Matters for European Readers

For European crypto readers, the downgrade is a reminder that stablecoin competition is no longer just about circulation and market share. The split of reserve income and the terms of partner agreements are becoming just as important. That matters for firms using stablecoins in payments, treasury management, or exchange liquidity, because the structure behind a token can matter as much as the peg itself. The pressure on Circle also comes as the total stablecoin market has already fallen by about $10 billion (€8.8 billion) since May, driven by weaker crypto activity and growing competition from newly regulated issuers. That broader trend is also reflected in the drop in the stablecoin market, where USDC and USDT made up a large share of the decline.