Mizuho questions Circle despite bank approval
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- Mizuho kept its neutral rating on Circle after its US bank approval.
- The bank said slowing USDC growth and stronger competition remain key risks.
- Mizuho said the approval alone is unlikely to change Circle's outlook.
Circle Internet Group received final approval to open a national trust bank, but Mizuho said the decision does not solve the company's main challenges.
Mizuho kept its neutral rating and said investors may be placing too much value on the approval.
“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,” Mizuho analysts led by Dan Dolev said.
Mizuho said USD Coin (CRYPTO:USDC) supply has fallen by about US$7 billion since March to around US$74 billion.
Circle shares rose 5% after the announcement but later fell about 4.7%, while Mizuho pointed to growing competition from Open USD.
Open USD is backed by more than 140 financial and technology companies, including Mastercard, Stripe, and Coinbase.
Mizuho said Circle still faces slower USDC growth and stronger competition despite the regulatory approval.
