Key Takeaways:
Circle's stock swung 19% in a week as a rival stablecoin launch triggered a selloff that was partly reversed by a federal banking charter.
Circle Internet Group Inc. shares fell 19% to $63.01 after more than 140 firms including Coinbase Global Inc. and Mastercard Inc. backed a rival stablecoin, before rebounding 15% on a federal banking approval.
"The approval of our national trust bank sets a new standard for transparency, governance and scale for Circle's infrastructure," Jeremy Allaire, co-founder and chief executive officer of Circle, said in a statement.
The Office of the Comptroller of the Currency granted final approval for Circle National Trust on July 10, shifting oversight of the $73.2 billion USDC reserve from state-by-state rules to a federal framework under the GENIUS Act. The stock climbed to about $72.15 in pre-market trading, adding more than $2 billion in market value, after touching a one-week high of $73.80. During regular trading, shares changed hands 8.4% higher at about $68.40, according to Yahoo Finance data.
The whipsaw captures the tension at the heart of Circle's business. USDC generates revenue from interest on its Treasury-backed reserves, and the OUSD coalition — which routes more of that yield to participants — threatens the economics that made Circle a $263 stock before the selloff. With analysts rating CRCL a buy and a 12-month target near $134, the question is whether the OCC charter can offset the competitive pressure.
The OUSD stablecoin, unveiled by an independent operator called Open Standard, directly challenges how Circle shares reserve income with distributors. Under the current USDC model, Circle splits interest income from the roughly $73 billion in Treasury holdings with partners including Coinbase. OUSD's consortium structure returns a larger share to participants, potentially luring institutions that currently help Circle scale.
Coinbase's role is particularly pointed. The exchange praised Circle's OCC approval through CEO Brian Armstrong, yet it also joined the OUSD coalition late last month alongside Mastercard and BlackRock. Coinbase is Circle's largest distribution partner under a revenue-sharing agreement that splits interest income from USDC's backing assets. The competing loyalties highlight how quickly stablecoin economics can shift when a rival offers better terms.
The OCC approval brings Circle under the same federal oversight framework as traditional trust banks, a status that Sony Bank, Ripple, BitGo, Fidelity Digital Assets and Paxos have also secured since December. Circle first filed its trust bank bid in June 2025 and was among five crypto firms granted conditional approval that December. The shift follows a regulatory pivot under President Donald Trump's second administration that has opened banking access to crypto firms after years of restricted entry.
Cathie Wood's ARK Invest bought about 217,900 Circle shares worth roughly $13.7 million on July 9, the day before the OCC approval, adding to more than $37 million in total purchases over eight weeks, according to trade disclosures.
Circle's stock had swung from a 52-week high near $263 to near $63 as the OUSD threat emerged, before the OCC news reversed part of the decline. The 19% drop on the OUSD announcement may have been overdone given that Circle now operates under a federal banking framework that rivals cannot easily replicate. Still, with 140 firms aligned behind OUSD and USDC's largest distributor among them, the competitive pressure on Circle's core revenue model remains unresolved.
This article is for informational purposes only and does not constitute investment advice.
