Circle Squeezed as Coinbase Backs Rival Stablecoin, Mizuho Warns

• Coinbase’s backing of rival stablecoin OUSD gives it leverage over Circle.
• Mizuho cut Circle’s price target to $50 from $85.
• USDC supply fell $7 billion since March, the steepest drop since 2022.

Coinbase, Circle’s largest USDC distributor, is also a backer of rival stablecoin Open USD (OUSD) — a dual role that hands it significant leverage ahead of the August renewal of its revenue-sharing agreement with Circle.

Japanese investment bank Mizuho Securities flagged the conflict on July 14, 2026, downgrading Circle Internet Group (NYSE: CRCL) to Underperform from Neutral and cutting its price target to $50 from $85

Mizuho warned the standoff could force Circle to hand over a larger share of its reserve income just to keep its most important partner in place.

Coinbase’s Dual Role Creates a Conflict of Interest

Under Circle’s current arrangement, Circle invests the dollars backing USDC in interest-bearing U.S. Treasury securities and shares the resulting reserve income with Coinbase. Circle has historically retained roughly 38% of that economics, with Coinbase receiving the remainder.

Open USD, launched June 30, by a coalition of more than 140 companies including BlackRock, Coinbase, Mastercard, Stripe, and Visa, inverts that structure: rather than an issuer capturing most of the yield, OUSD passes nearly all reserve income directly to its distribution partners, keeping only a small management fee for itself.

As an OUSD consortium member, Coinbase now holds added leverage in its August renewal talks with Circle. To retain its most vital distributor, Circle will likely be forced to hand over a far larger slice of its revenue pie, directly squeezing its profit margins.

Mizuho Cuts EBITDA Forecast on Margin Pressure

Mizuho raised its projected 2027 distribution and transaction expense ratio for Circle to 73% from 64%, and lowered its adjusted EBITDA forecast to $699 million from $1.09 billion — about 25% below the Wall Street consensus of $941 million.

Circle (CRCL) shares have plunged 76% from its June 2025 peak of $263, falling to around $63. Coinbase (COIN) has dropped 63% from its record high of $420 to about $157.

USDC Supply Contracts as Competition Builds

USDC’s circulating supply has fallen by roughly $7 billion from its March peak to about $74 billion in July, as redemptions outpaced new issuance — the stablecoin’s largest monthly contraction since 2022.

Mizuho noted that the rise of consortium-backed stablecoins like OUSD signals a broader risk of commoditization across the sector, one that could make it harder for Circle to defend its position even after securing final approval from the Office of the Comptroller of the Currency (OCC) to operate a national trust bank

The involvement of major institutions such as BlackRock, Visa, and Mastercard in OUSD underscores how traditional finance is actively shaping the stablecoin market’s next phase.

Why This Matters

Coinbase’s dual role as both Circle’s top distributor and an OUSD backer signals that the easy, high-margin economics stablecoin issuers have enjoyed may be ending. How the August renewal plays out could set a precedent for revenue-sharing across the wider stablecoin industry.

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