Circle faces ‘medium-term’ risks from slow USDC growth, rising distribution costs: Mizuho

Stablecoin issuer Circle — best known for launching USD Coin (USDC) — could be staring down medium-term headwinds, according to a fresh note from Mizuho Bank. The concerns center around sluggish growth in USDC adoption and rising distribution costs, which together could weigh on the company’s margins and long-term expansion plans.

USDC Growth is Losing Momentum

While USDC remains one of the largest stablecoins in circulation, its growth has slowed compared to competitors like Tether (USDT). Several factors may be contributing to this stall:

• Increased competition from multi-chain stablecoins.
• Reduced DeFi lending activity, where USDC once thrived.
• Regulatory uncertainty in the U.S. affecting user confidence.

According to recent blockchain data, USDC’s market cap has yet to fully recover from last year’s contraction, leaving Circle in a slower growth trajectory.

Distribution Costs Are Rising

Mizuho’s report also highlights escalating distribution costs as a key concern. These costs — which include exchange listings, liquidity incentives, and payment network integrations — have risen as Circle attempts to expand USDC’s reach across multiple blockchains.

While multi-chain expansion is essential for competitiveness, it also adds layers of operational expense that could weigh on profitability, especially if revenue growth doesn’t keep pace.

What This Means for Circle’s Medium-Term Outlook

Mizuho’s analysts warn that if USDC adoption continues to grow at its current pace — or worse, stagnates — Circle could find it challenging to justify its increasing spend.

Key potential outcomes include:

• Tighter cost controls that could slow global expansion.
• Strategic partnerships to offset operational expenses.
• Possible pivot toward new product lines beyond stablecoins.

Competitive Pressure Is Mounting

Circle’s challenges are compounded by rivals who are innovating aggressively. Tether’s dominance in global payment corridors, PayPal’s PYUSD integrations, and emerging algorithmic stablecoins could further squeeze USDC’s market share if Circle fails to reignite growth.