Mizuho: Clarity Act May Intensify Stablecoin Competition, Creating Headwinds for Circle's USDC

According to Mizuho analysts, while the proposed Clarity Act could benefit the broader digital asset industry, it may create long-term challenges for Circle. Regulatory clarity will likely attract major institutions to the stablecoin market, accelerating commoditization and eroding Circle's revenue from USDC, which currently retains approximately 38% of reserve yields. Circle faces mounting pressure from Open USD, an initiative backed by a coalition of over 140 financial, tech, and crypto firms including Visa, Mastercard, Stripe, BlackRock, and Coinbase. Unlike Circle's revenue-sharing model, Open USD employs a pass-through structure that distributes nearly all reserve earnings to distributors while retaining minimal management fees.

Coinbase, USDC's largest distributor, simultaneously supports Open USD, positioning it to negotiate more favorable terms with Circle when their distribution agreement comes up for renewal as early as next month, analysts note.