Key Takeaways:
Circle Internet Financial signed a memorandum of understanding with Japanese payment network JCB to test USDC for cross-border treasury operations and merchant payments, the latest push into Asia's regulated stablecoin market as the company confronts competitive and structural pressures on its core economics.
"Consortiums are really difficult to hold together over time," Heath Tarbert, Circle's president, told Fox Business on Tuesday, downplaying the threat from Open USD, a stablecoin project backed by roughly 140 companies including Visa, Stripe, Mastercard and Google. Tarbert argued USDC's scale — roughly $73 billion in circulating supply across 34 blockchains — gives it a significant advantage over newcomers.
The JCB agreement adds to a growing list of stablecoin payment initiatives in Japan, which was among the first major economies to establish a legal framework for fiat-backed tokens under amendments to the Payment Services Act that took effect in 2023. Convenience store operator Lawson plans to test yen-denominated stablecoin payments at a Tokyo location in August, while payments company Netstars launched a merchant service supporting USDC, USDT and JPYC across Solana and Polygon. In June, Circle and Nomura, Japan's largest investment bank, were reported to be developing a stablecoin-based foreign exchange settlement service for Japanese companies.
The expansion comes as Circle faces headwinds on multiple fronts. JPMorgan lowered its earnings estimates for both Circle and Coinbase, arguing their revamped revenue-sharing agreement with Hyperliquid creates a "prisoner's dilemma" that incentivizes the two firms to compete for USDC distribution at the expense of each other's economics. Hyperliquid, now one of the largest crypto trading venues, holds about $6 billion of USDC, or roughly 8% of the circulating supply, JPMorgan estimated. Under the new arrangement, Coinbase will classify USDC on Hyperliquid as "on-platform," collecting reserve income and paying 90% of it to Hyperliquid — a shift from the previous structure where Coinbase and Circle split the revenue nearly evenly.
Analysts Turn Cautious on CRCL
Mizuho downgraded CRCL stock to Underperform from Neutral and cut its price target to $50 from $85, implying roughly 21% downside from the stock's last close near $62. The stock has fallen about 76% from its post-IPO peak of roughly $260 last June. Mizuho said it now expects interest rates in 2027 to stay higher than previously forecast, but added that higher rates alone would not offset the impact of lower pricing and increased competition on Circle's earnings.
Tarbert acknowledged the share price decline but said if Circle executes on its longer-term plans, including its Arc blockchain infrastructure project, "the stock is going to take care of itself." He added that Circle is "playing the long game."
USDC Supply Shrinks as Competition Intensifies
USDC's circulating supply has fallen to about $73 billion from nearly $80 billion in March, part of a broader $10 billion contraction in the stablecoin market since May as crypto trading activity cooled and new regulated rivals chipped away at the dominance of USDC and Tether's USDT. On Stocktwits, retail sentiment around CRCL remained in the bullish zone, while chatter stayed at high levels over the past day.
The JCB partnership gives Circle a foothold in Japan's regulated stablecoin market, where banks, trust companies and licensed money transfer providers can issue fiat-backed tokens under the 2023 legal framework. Japan's Lower House in June passed a bill classifying crypto assets as financial instruments, potentially opening the door to crypto exchange-traded funds and bringing the sector under stricter market rules. For Circle, the ability to process USDC payments through JCB's network — one of Japan's dominant payment rails — could provide a meaningful on-ramp for corporate and merchant adoption in the world's fourth-largest economy, though the test phase means revenue impact remains distant.
This article is for informational purposes only and does not constitute investment advice.
