Mizuho Details Rising Redemptions and New Stablecoin Rival Pressuring Circle

Stablecoin issuer Circle faces several challenges despite its receipt of final approval from the Office of the Comptroller of the Currency (OCC) to establish a bank, analysts from Japanese investment bank Mizuho wrote in a Friday (July 10) note, CoinDesk reported Monday (July 13).

Reiterating Mizuho’s neutral rating on the company, the analysts led by Dan Dolev wrote that Circle has seen a decline in its market capitalization since March, has seen redemptions of its stablecoin outpace new issuance since March, and faces competition from the newly launched Open USD stablecoin, according to the report.

Speaking of Circle’s receipt of approval from the OCC, the Mizuho analysts wrote, per the report: “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.”

Shares of Circle closed 5% higher on Friday after news of the OCC approval but was trading 4.7% lower Monday at the time of the CoinDesk report.

Circle did not immediately reply to PYMNTS’ request for comment.

PYMNTS reported Friday that Circle received the OCC approval to establish a national trust bank that will operate under the name Circle National Trust and will offer fiduciary digital asset custody services for Circle and its affiliates.

In the future, the bank may also offer its digital asset custody service to institutional customers directly, focusing on banks, regulated derivatives organizations and other financial institutions, and manage the USDC Reserve for the USDC stablecoin.

Circle Co-Founder, Chairman and CEO Jeremy Allaire said in a Friday press release that the OCC approval “unlocks a new phase of adoption, where leading financial institutions can build on public blockchains with clarity and confidence.”

PYMNTS reported in May that the cryptocurrency sector’s blockchain-native firms and builders are increasingly tasked with sustaining premium valuations while simultaneously absorbing the costs of expansion, compliance and platform development.

During Circle’s first-quarter earnings call, the company framed itself as not a payments company, but as an economic operating system being built for the future. The firm emphasized the convergence of artificial intelligence systems and blockchain-based economic coordination.