Mizuho: Clarity Act may erode Circle’s USDC revenue

Mizuho analysts, led by Dan Dolev, wrote in a Wednesday research note that the Clarity Act could speed commoditization in the stablecoin market and, over the long term, erode revenue tied to Circle's USDC.

The analysts said regulatory certainty from the Clarity Act could make it easier for large banks, payments firms and technology companies to offer dollar-backed stablecoins at scale, increasing competition for existing issuers.

Mizuho highlighted Open USD, a new stablecoin backed by a consortium of more than 140 firms including Visa, Mastercard, Stripe, BlackRock and Coinbase, as a key competitive threat. “CLARITY Act opens the door for even more institutional scale competition for stablecoins, further commoditizing CRCL's USDC,” the analysts wrote.

Open USD uses a pass-through yield model that routes most reserve income to distributors while keeping a small management fee. Under Circle's current structure, the issuer retains about 38% of USDC reserve income after sharing revenue with distribution partners such as Coinbase and Binance, the note said.

The note added that Coinbase's endorsement of Open USD could strengthen its leverage in upcoming revenue-sharing negotiations with Circle. Mizuho said the distribution agreement could be renegotiated as soon as next month.

Lawmakers released an updated version of the Clarity Act this week, and the analysts said a full Senate vote could occur as soon as next week. They also noted that ethics concerns involving some senators might affect the bill's ability to secure enough votes.

Mizuho maintained a $50 price target for Circle in the research note. The analysts did not forecast immediate revenue losses but said competitive dynamics could shift over time as institutional players roll out products in a clearer regulatory environment.

Background: Circle issues USDC, a widely used dollar-backed stablecoin. Open USD is a consortium-led stablecoin initiative backed by major payments firms and financial institutions. The Clarity Act is proposed federal legislation that would set rules for crypto market structure and stablecoin issuance in the United States.