Mizuho says Circle’s bank approval will not revive USDC growth as rivals gain ground

Japanese investment bank Mizuho has stuck to its neutral rating on Circle, arguing that the company’s recent OCC approval to operate as a national trust bank does little to solve the core problems facing its USDC stablecoin.

Analysts at the bank said the regulatory green light, announced last week, addresses one part of Circle's compliance picture – but it does not reverse the slowing pace of USDC adoption. Nor does it blunt the threat from rival stablecoins that have been eating into the token’s market share.

USDC’s circulating supply has stagnated over the past several months, even as the broader crypto market recovered from the 2024 lows. Competitors such as USDT from Tether and newer entrants backed by traditional finance firms have captured much of the new demand, particularly in decentralized finance and cross-border payments.

Mizuho’s note, published Monday, offered a measured take on the OCC milestone. The approval allows Circle to hold customer funds in a federally chartered trust bank, a status that could reduce counterparty risk and improve operational transparency. But the analysts warned that regulatory clarity alone is not enough to reignite growth. "The market has moved on," the note stated. "Issuers that cannot offer native yield, deep liquidity across chains, and real-time settlement will continue to lose ground."

The assessment points to a broader shift in the stablecoin landscape. In 2025, PayPal launched its own dollar-pegged token, and several large crypto exchanges introduced yield-bearing alternatives. These products have drawn liquidity away from USDC, which has long prided itself on regulatory compliance but has offered little in the way of investor incentives.

Circle has not publicly responded to the Mizuho report. The company’s management previously stated that the OCC approval would pave the way for institutional adoption, especially among banks and asset managers that require federally regulated custodians. Mizuho, however, remains unconvinced that those inflows will materialize in the near term.

For traders and USDC holders, the bank’s neutral stance serves as a reminder that regulatory progress does not automatically translate to price support or supply growth. The next verifiable catalyst to watch is Circle’s quarterly attestation report, due in August, which will reveal whether USDC’s total circulating supply has stabilized or continued to decline.