Circle's USDC faces a two-front war: rising redemptions that have outpaced new issuance since March and a new rival backed by 140 companies including Coinbase.
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Circle mints $250M USDC on Solana as Open USD threatens dominance
Circle received OCC approval on July 10 to establish a national trust bank, sending shares up 4.97% to $66.14, but Mizuho warned USDC redemptions have outpaced issuance since March as a new rival emerges.
"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," Dan Dolev, lead analyst at Mizuho, said in a July 10 note reported by CoinDesk.
The new competitor, Open USD, launched June 30 with backing from more than 140 firms including Visa, Mastercard, BlackRock, Alphabet's Google, Shopify and Coinbase — a founding USDC partner whose revenue-sharing agreement with Circle expires Aug. 18. OUSD offers zero-cost minting and redemptions and shares reserve income with partners, directly challenging Circle's fee model.
If Coinbase declines to renew its Circle agreement, it would remove a key distribution channel that Chief Financial Officer Jeremy Fox-Geen said contributed to the company's margin performance in Q1. The Aug. 18 deadline now looms as the most immediate test of Circle's ability to defend its market position.
Open USD Threatens Circle's Fee Structure
OUSD's governance model — an independent board of partners rather than a single issuer — may appeal to institutions wary of Circle's control over USDC. The stablecoin commanded 70% of adjusted stablecoin volume in the first quarter, according to Yahoo Finance's Scott Melker, outpacing Tether's 25% share. But OUSD's promise of zero-cost minting with no volume limits directly undercuts Circle's fee income.
Circle reported Q1 USDC circulation of $77 billion, up 28% year over year, with on-chain transaction volume surging 263% to $21.5 trillion. Total revenue and reserve income reached $694 million, a 20% increase, while adjusted EBITDA grew 24% to $151 million. Yet circulation was roughly flat sequentially, distribution costs rose 17% and the reserve return rate declined 66 basis points as the Secured Overnight Financing Rate fell.
Solana Minting Adds Liquidity Amid Uncertainty
Circle minted $250 million of USDC on Solana on July 13, adding more than 10% to the existing USDC supply on that chain in a single transaction, according to social media account @Crypto_Crib_. The issuance brings cumulative USDC minting on Solana in 2026 to approximately $64.8 billion, reinforcing the network's role as a settlement layer for stablecoin transactions. The additional liquidity may support Solana's price prospects, with some market participants linking it to a potential move toward $90 in July.
CRCL shares have lost more than 74% from their 52-week high of $262.97, and short interest stands at 21.87 million shares, or 9.87% of the public float, as of June 30. The analyst consensus 1-year price target of $126.17 implies roughly 90% upside from the current $66.14, though Simply Wall St. issued a narrative fair value of $35.82 in March, reflecting the wide divergence in views on Circle's valuation.
This article is for informational purposes only and does not constitute investment advice.
[1] Mizuho Details Rising Redemptions and New Stablecoin Rival Pressuring Circle[2] Circle mints $250M USDC on Solana amid rising liquidity demand in 2026[3] Circle mints $250M USDC on Solana, boosting liquidity by 10%[4] Circle's Options Frenzy: A High-Stakes Bet on Stablecoin Supremacy Amidst a Looming Threat - Kavout | AI
