Two Wall Street banks turn on Circle's stablecoin economics — while two others say the fear is overdone

On July 14, two of Circle's Wall Street analysts moved against the company on the same day, and for the same underlying reason: the money Circle keeps from the reserves backing USDC is getting harder to defend. Mizuho downgraded the stock and cut its price target by more than 40%; JPMorgan lowered earnings estimates for both Circle and its largest partner, Coinbase. Both notes were reported by CoinDesk and The Block, which drew on the research directly.

The mechanics matter here, so start with them. Circle earns most of its money from yield on the Treasuries and cash backing USDC. Under its current setup it captures that reserve income first, then shares a portion with distribution partners such as Coinbase and Binance — keeping roughly 38% of reserve income for itself, per The Block. That split is the business. Anything that forces Circle to hand more of it to partners hits the core.

Mizuho analyst Dan Dolev's team cut Circle (CRCL) to underperform from neutral and dropped the price target to $50 from $85 — a reduction The Block put at over 41%. The stated catalyst is Open USD (OUSD), a dollar-backed stablecoin unveiled June 30 by the "Open Standard" consortium, which CoinDesk and The Block report counts more than 140 financial, tech and crypto firms, including Mastercard, Stripe, BlackRock and Coinbase; The Block also names Visa. OUSD runs a "pass-through" model: it charges a small management or operating fee and routes nearly all reserve yield to issuers and distributors. Mizuho's argument is that once distributors see a partner willing to hand back almost everything, they'll push Circle to match. "We believe that over time, distribution partners will be emboldened to demand more from CRCL," Dolev wrote.

Mizuho put numbers on it. The bank raised its estimate for Circle's 2027 distribution and transaction costs to 73% from 64% of the relevant revenue, and cut its 2027 adjusted EBITDA forecast to $699 million from $1.09 billion — about 25% below the roughly $941 million Wall Street consensus, per CoinDesk. Notably, Mizuho now expects somewhat higher interest rates in 2027 than before, which would lift reserve yields, but it said that tailwind wouldn't offset the pricing pressure. These are Mizuho's own projections, not results.

There's a near-term trigger baked into the timing. Circle's revenue-sharing agreement with Coinbase — its largest USDC distributor — is up for renewal in August, both outlets report. Because Coinbase is also a founding OUSD member, Mizuho argues it walks into that negotiation with more leverage.

JPMorgan reached a similar place by a different road. It pointed to Circle's revised USDC deal with the Hyperliquid decentralized exchange: under the new terms, per The Block, Coinbase receives all reserve income tied to Hyperliquid's USDC balances and then returns roughly 90% of the yield to the DEX. JPMorgan called the structure a "prisoner's dilemma" — one that pushes Circle and Coinbase to undercut each other on revenue-sharing terms to keep partners. Hyperliquid holds about $6 billion in USDC, or roughly 8% of circulating supply, according to the bank.

Not everyone agrees. After the OUSD launch, Bernstein reiterated an outperform rating and a $190 price target, arguing the consortium validates stablecoins as an asset class rather than threatening Circle, and that Circle's liquidity, regulatory head start and network effects are hard to replicate — while consortium-led financial projects have historically struggled. William Blair also kept an outperform rating, calling OUSD "a solution searching for a problem."

Key facts

• Mizuho: downgraded Circle (CRCL) to underperform from neutral; price target cut to $50 from $85 (a drop The Block put at >41%). (CoinDesk, The Block, citing Mizuho)
• Mizuho estimates: 2027 adjusted EBITDA cut to $699M from $1.09B, ~25% below ~$941M consensus; 2027 distribution/transaction costs raised to 73% from 64%. (CoinDesk, citing Mizuho)
• Circle stock: trading ~$62.63, down ~0.6%, at CoinDesk's publication time. (CoinDesk, The Block)
• Circle's model: keeps ~38% of reserve income after sharing with partners such as Coinbase and Binance. (The Block)
• Open USD: unveiled June 30 by the Open Standard consortium; 140+ partners including Mastercard, Stripe, BlackRock, Coinbase (and Visa, per The Block); pass-through model routes nearly all yield to distributors. (CoinDesk, The Block)
• USDC supply: ~$73B, down from nearly $80B in March; the overall stablecoin market has shrunk ~$10B since May. (CoinDesk)
• Coinbase renewal: revenue-sharing agreement up for renegotiation in August. (CoinDesk, The Block)
• JPMorgan / Hyperliquid: under the revised deal, Coinbase takes all reserve income on Hyperliquid's USDC, returns ~90% to the DEX; JPMorgan calls it a "prisoner's dilemma." Hyperliquid holds ~$6B USDC, ~8% of supply. (The Block, citing JPMorgan)
• Bulls: Bernstein reiterated outperform, $190 target; William Blair reiterated outperform, called OUSD "a solution searching for a problem." (The Block)

The real-world read

The story underneath the ratings is that Circle's margin depends on keeping reserve yield that its own partners increasingly have the leverage to claw back — and the evidence for that isn't hypothetical. The Hyperliquid deal already exists, and its shape (Coinbase keeps the income, then returns ~90%) is exactly the pass-through direction Mizuho fears OUSD will normalize. Two banks arriving at the same conclusion from different starting points — a new competitor versus an existing contract — is worth more than either alone.

Watch the conflicts of interest on both sides. Coinbase is simultaneously Circle's biggest distributor, a founding member of the competing OUSD consortium, and the counterparty in an August renegotiation. Every one of those roles points the same way: toward Coinbase extracting more. That's not spin; it's structural, and it's the crux of JPMorgan's "prisoner's dilemma."

The bull case deserves the same scrutiny. Bernstein's line that OUSD "validates the asset class" is the kind of framing that can be true and beside the point at once — validation doesn't pay Circle's margins, and Bernstein doesn't reconcile it with the specific claim that distributors will demand a bigger cut. William Blair's "solution searching for a problem" dismissal sits awkwardly next to a 140-partner roster that includes Visa, Mastercard, Stripe and BlackRock; a consortium that large is at minimum a credible problem for pricing, whatever its odds of shipping a winning product. Both bull notes lean on Circle's "regulatory head start" and "network effects" — the same moat every incumbent invokes right before margins compress.

Two things are conspicuously unquantified. Nobody in either report attaches a number to how much reserve income Circle would actually concede if it matched OUSD-style terms — Mizuho models the cost line (73% vs 64%) but not the competitive floor. And the bull targets ($190) versus Mizuho's $50 imply a spread too wide to be about modeling alone; it's a disagreement about whether the pass-through model spreads at all. That's unresolved, and neither side should be read as settled.

One caveat on sourcing: these are secondary reports of sell-side research. The primary documents are the Mizuho, JPMorgan, Bernstein and William Blair notes themselves, which weren't published in full. The figures above are the banks' estimates and price targets — interested, model-driven forecasts, not audited facts. (The Block also discloses that Foresight Ventures, a crypto investor, is its majority owner; its coverage here tracks CoinDesk's.)

Opinion, and whose

• Mizuho (Dan Dolev): OUSD "could fundamentally alter" Circle's model; distributors will be "emboldened to demand more"; underperform, $50 target.
• JPMorgan: the Circle–Coinbase–Hyperliquid structure is a "prisoner's dilemma" that pressures USDC earnings; lowered estimates for both Circle and Coinbase.
• Bernstein: OUSD validates stablecoins rather than threatening Circle; outperform, $190 target.
• William Blair: OUSD is "a solution searching for a problem"; outperform.

Sources

• CoinDesk (Jul 14, 2026) — reported Mizuho's downgrade, price target, and the EBITDA/cost estimates; provided USDC supply figures and OUSD's June 30 launch date and partner list; referenced JPMorgan's note. Secondary reporting on the underlying research.
• The Block (Kyle Baird, Jul 14, 2026) — reported the Mizuho and JPMorgan notes, Circle's ~38% reserve-income retention, the Hyperliquid deal mechanics, and the Bernstein/William Blair counterpoints. Secondary reporting; The Block discloses Foresight Ventures as majority owner.
• Primary (not independently obtained): research notes from Mizuho, JPMorgan, Bernstein and William Blair, as characterized by the outlets above.

This is news, not investment advice; figures cited are analyst estimates and price targets, not guarantees.