Japanese investment bank Mizuho downgraded Circle (CRCL) from neutral to underperform and lowered its price target from $85 to $50, arguing that OpenUSD’s business model threatens the stablecoin issuer’s long-term economics.
Circle stock was trading 0.6% lower at $62.63 at press time.
OpenUSD, a dollar-backed stablecoin announced by the Open Standards Consortium on June 30, “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 a note to clients on Tuesday.
The consortium includes over 140 partners including Mastercard (MA), Stripe, Coinbase (COIN), and BlackRock (BLK).
$USDC has lost momentum in recent months, with circulating supply falling to about $73 billion from about $80 billion in March. The decline comes as the stablecoin market has shrunk by about $10 billion since May due to a slowdown in crypto trading activity and increased competition from newly regulated issuers.
Unlike the circle $USDC Analysts say OpenUSD collects a small operating fee and distributes the majority of reserve income to issuers and distributors, although the model is to earn reserve income before sharing a portion with partners such as Coinbase and Binance.
