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Mizuho says Clarity Act could pressure Circle as stablecoin competition builds

Mizuho says Clarity Act could pressure Circle as stablecoin competition builds

Mizuho says clearer long-term stablecoin rules could intensify competition, commoditize issuance and weaken Circle’s pricing power as Coinbase gains leverage through its backing of OpenUSD.

USDC

Fact Check
Every element of the claim is directly supported by primary financial news coverage. The Block reports Mizuho's argument that the Clarity Act could commoditize stablecoins, intensify institutional competition, and erode Circle's USDC reserve revenue, with Coinbase gaining leverage in revenue-sharing talks through its Open USD backing. Investing.com independently confirms the commoditization and institutional-competition framing. CoinDesk and Cryptobriefing corroborate the Underperform rating, $50 target, and Open USD consortium threat. No conflicting evidence was found.
Summary

Mizuho said the Clarity Act could hurt Circle over the long term by opening the stablecoin market to more institutional competitors and further commoditizing USDC. The analysts said regulatory clarity would intensify competition and eventually erode Circle’s earnings, while the OpenUSD project backed by a consortium of more than 140 financial, technology and crypto companies could pose a significant threat to Circle’s revenue. They also highlighted differences in the two models, saying Circle keeps about 38% of income from USDC reserves after sharing revenue with partners including Coinbase and Binance, while OpenUSD passes most reserve income to distributors and charges only a small management fee. Mizuho said Coinbase’s support for OpenUSD could strengthen its hand in the next round of revenue-sharing talks with Circle, with the distribution agreement potentially up for renegotiation as early as next month. Separately, the Clarity Act moved closer to a full Senate vote on July 22 after Republicans released updated bill text, though ethics-related issues may complicate passage. Mizuho maintained its $50 price target on Circle, while the shares traded at about $67, down about 6% on the day.

Terms & Concepts
  • stablecoin: A digital token designed to maintain a fixed value, typically by being pegged to a fiat currency such as the U.S. dollar.
  • OpenUSD: A dollar-pegged stablecoin project that uses a pass-through model giving most reserve income to distributors rather than the issuer.
  • Clarity Act: A U.S. crypto market structure bill that Mizuho says could bring regulatory clarity and attract more competition to stablecoins.