Bernstein Reaffirms Outperform on Circle, Sees 59% Upside Even if CLARITY Act Fails
Key Takeaways
- •Bernstein reaffirmed an Outperform rating on Circle with a $140 price target, implying roughly 59% upside from the recent close of $87.98, though this is below its prior $190 target.
- •Bernstein argues Circle's growth does not depend on the CLARITY Act passing in September, noting that stablecoin issuers already operate under the GENIUS Act's federal reserve, redemption and oversight requirements.
- •Circle's second-quarter revenue rose 7% year over year to $701 million, slightly missing forecasts, while net income of $48 million and EPS of $0.18 beat expectations.
- •USDC supply jumped about $1.7 billion in a single week after nearly six flat months, and Circle received OCC approval in July to establish Circle National Trust, a federally supervised national trust bank.
- •Mizuho downgraded Circle to Underperform in July with a $50 price target, citing margin pressure from Open USD's consortium model, an assessment Circle President Heath Tarbert disputed.
Bernstein has reaffirmed its Outperform rating and $140 price target on shares of Circle Internet Group (CRCL), the issuer of the USDC stablecoin, arguing that the company's growth cycle does not depend on the U.S. Congress passing crypto market structure legislation in September. Circle has been publicly traded on the New York Stock Exchange since its June 2025 initial public offering. The target implies roughly 59% upside from Circle's recent close of $87.98. At the time of writing, CRCL was trading at $89.20, up around 1.4%. The rating comes even as uncertainty remains around the CLARITY Act.
The research note, published Aug. 24 and led by analyst Gautam Chhugani, makes the case that Circle's growth does not hinge on Congress passing the CLARITY Act, the U.S. crypto market structure bill, in September, ahead of a scheduled Sept. 15 vote on the legislation. The bill cleared the House in July 2025. Stablecoin issuers, meanwhile, already operate under a dedicated federal regime: the GENIUS Act, signed into law in July 2025, set reserve, redemption and oversight requirements for payment stablecoins, while the CLARITY Act addresses the wider digital asset market and the division of authority between the SEC and CFTC.
Circle posted second-quarter revenue of $701 million, up 7% year over year, though the figure came in slightly below analyst forecasts. Net income for the quarter was $48 million, with earnings per share of $0.18 beating expectations. Circle's revenue is driven largely by interest earned on the reserves backing USDC, which links its interest income to the level of USDC in circulation.
USDC Supply Returns to Growth
After nearly six months of sideways movement, USDC supply jumped by roughly $1.7 billion in a single week. Bernstein sees the increase as a sign that adoption is moving again, and estimates that USDC handles about 80% of decentralized exchange trading and finance volumes. USDC is the second-largest dollar stablecoin by circulation, behind Tether's USDT.
Adjusted stablecoin transaction volume, which strips out bots and high-frequency activity, totaled approximately $11 trillion in 2025 and was running at a $17 trillion annualized pace through July 2026 — an increase of around 60% from a year earlier, according to the note.
Institutional infrastructure has continued to build out. In July, Circle received approval from the Office of the Comptroller of the Currency to establish Circle National Trust, a federally supervised national trust bank. The move could eventually bring USDC reserve management under a federally regulated structure.
Standard Chartered has added direct USDC minting and redemption for institutional clients. A separate integration with Fireblocks allows institutions to manage USDC balances and route payments into local fiat through Circle's Payments Network, which reached $14.7 billion in annualized transaction volume at the end of the second quarter.
Agent Payments Open Another Growth Lane
Bernstein also flagged machine-to-machine payments as a growing part of the USDC story. Circle launched Agent Stack in May, giving software agents the tools to hold assets and make programmable payments. By the second quarter, more than 900 paid services were using Agent Stack, and 99.3% of x402 agent payment volume — x402 being an open payment protocol designed for internet-native, machine-to-machine transactions — settled in USDC.
A separate Keyrock report found that AI agents settled $73 million across 176 million transactions over 12 months, with USDC handling 98.6% of those payments.
Regulatory and Competitive Backdrop
On regulation, Bernstein said a failed CLARITY Act vote on Sept. 15 would likely push the SEC and CFTC to step in with guidance rather than stall progress for Circle.
On competition, Mizuho cut Circle to Underperform in July with a $50 price target, citing margin pressure from Open USD's consortium model. Circle President Heath Tarbert, a former CFTC chairman, pushed back on that assessment, pointing to USDC's liquidity and existing integrations.
Circle continues to add partners. Its deal with Japan's JCB covers potential USDC use in corporate treasury and merchant payments. Partnerships with Kakao and Toss are exploring stablecoin use in South Korea. USDC also joined BNY's Digital Asset Custody platform in June.
Bernstein's current $140 target compares with a previous target of $190 for the stock.
