Circle Stock Surges 14% on Buy Rating and Senate Stablecoin Bill

Circle, the issuer of the USDC stablecoin, experienced a significant surge in its stock price, climbing 14% to $228. This rally was driven by a buy rating and a $235 price target initiated by a Wall Street research firm, which highlighted Circle's potential as a "top-tier crypto disruptor." The firm's analyst noted that Circle's founders envisioned USDC as a means to make money more frictionless, aiming to raise global economic prosperity.

The positive momentum for Circle was further fueled by the Senate's passage of the GENIUS Act, a stablecoin legislation that would establish the first federal framework for dollar-pegged stablecoins. This regulatory development benefited Circle and Coinbase, which have a revenue-sharing agreement on the $61.2 billion in USDC cash reserves. In contrast, Robinhood, which is less tied to crypto assets, saw a decline of 1.65%.

The analyst from the Wall Street research firm predicted that Circle's annual revenue could grow up to 30%, with gross margins around 40%, as the company continues to scale. However, the analyst also noted that nearly all of Circle’s revenue comes from interest earned on reserve assets, which could pose a risk if interest rates fall.

The GENIUS Act, if signed into law, would provide a comprehensive federal framework for U.S. dollar-pegged stablecoins, potentially benefiting companies like Circle and Coinbase that are deeply involved in the stablecoin market. This regulatory clarity could attract more investors and foster growth in the stablecoin sector.