Stablecoin company receives downgrade to 'Sell' by Compass Point following Trump's signing of the Stablecoin Bill.
In the second half of 2025, the stablecoin market is set for significant changes as major banks and fintech companies ramp up their stablecoin offerings. This development, according to analysts, could impact Circle's USDC and its competitive landscape.
Key players like JPMorgan Chase and Citibank are actively launching or expanding their own digital tokens and stablecoin-like solutions, targeting institutional and retail payments. Citigroup’s Citi Token, for instance, moved from pilot to live status in multiple markets by late 2024, signalling accelerated adoption. Other banks such as Bank of America and U.S. Bank are exploring similar products.
One significant issue is interoperability—allowing seamless payments across different banks, stablecoins, and borders. Analysts propose that major banks form a consortium to develop interoperable bank tokens comparable to stablecoin networks, potentially creating a competitive alternative to USDC’s open network.
Fintech companies are increasingly integrating stablecoins as a core feature, reflecting a shift from experimental to mainstream infrastructure. However, this trend also places pressure on companies like Circle to innovate and comply with regulatory standards to stay competitive.
Banks are advised to develop stablecoin strategies that complement rather than outright compete with existing major stablecoin providers like Circle, and to explore partnerships with stablecoin infrastructure providers. This suggests opportunities for collaboration but also risks of market share erosion for standalone stablecoins.
Circle’s USDC, a prominent dollar-backed stablecoin, may face reduced market dominance, particularly in institutional channels if banks’ deposit tokens gain traction inside their ecosystems. To maintain its competitive edge, Circle may need to focus on interoperability, deeper partnerships, and regulatory compliance.
The proliferation of tokenized cash is expected to materially shift payments in 2025, offering faster, cheaper, transparent, and globally accessible payments. However, true scaling depends on issues like liquidity, regulatory acceptance, and cross-border settlement solutions.
Meanwhile, shares of Circle (CRCL) have not been immune to these market shifts. Analysts at Compass Point have downgraded CRCL to a "sell" rating, citing increased stablecoin competition from banks and fintech companies as a potential detriment in the second half of 2025. Compass Point sets a price target of $130 for CRCL, a further 34% fall from its current trading price.
The all-time high of Circle's stock was $298.99 on June 23. Since then, the decline extends the stock's 17.47% fall over the past month, with the shares closing down more than 8% on Tuesday, trading at $198.31. Compass Point reaches their $130 price target by applying a 25x multiple on their 2030E EBITDA forecast while applying a 15% annual discount rate.
The GENIUS Act, America's first major piece of crypto legislation, was signed into law on 18th July, providing a clear framework for the issuance and trading of stablecoins. This development could potentially ease regulatory concerns and foster growth in the stablecoin market.
However, other potential negative catalysts for the CRCL share price include federal rate cuts, waning retail interest, and details of new revenue share agreements. Charles Schwab’s CEO hinted at the firm's interest in its own stablecoin last week, adding another layer of competition to the market.
In summary, the growing stablecoin competition from influential banks and fintech companies could pose a significant challenge to Circle’s USDC and CRCL shares. This competition is likely to evolve around issues of use case focus (institutional vs. retail), interoperability, regulatory compliance, and the pace of adoption of bank-issued tokens. Circle and fintech stablecoin providers must innovate and potentially collaborate to sustain and grow their market position amid this shifting landscape.
- Major banks and fintech companies are ramping up their stablecoin offerings in the second half of 2025, potentially impacting Circle's USDC and its competitive landscape.
- Key players like JPMorgan Chase and Citibank are actively launching or expanding their own digital tokens and stablecoin-like solutions, targeting institutional and retail payments.
- Analysts propose that major banks form a consortium to develop interoperable bank tokens, comparable to stablecoin networks, potentially creating a competitive alternative to USDC’s open network.
- The proliferation of tokenized cash is expected to materially shift payments in 2025, offering faster, cheaper, transparent, and globally accessible payments.
- To maintain its competitive edge, Circle may need to focus on interoperability, deeper partnerships, and regulatory compliance.
- The growing competition from banks and fintech companies could pose a significant challenge to Circle’s USDC and CRCL shares, and companies must innovate and potentially collaborate to sustain and grow their market position amid this shifting landscape.
