Cathie Wood’s ARK Invest has accumulated over 725,000 shares of Circle Internet Group in July, buying into weakness as the stablecoin issuer faces intensifying competition from the new Open USD consortium and structural revenue challenges. The purchases, made across the ARK Innovation ETF and ARK Next Generation Internet ETF, signal a long-term bullish stance despite Wall Street caution regarding Circle's near-term earnings potential and market share stability.

Structural Challenges and Revenue Impact

JPMorgan has reduced earnings forecasts for Circle and Coinbase after their agreement with Hyperliquid weakened USDC economics. Analysts led by Kenneth Worthington noted the deal creates a structural problem, as Coinbase now classifies USDC held on Hyperliquid as "on-platform" to collect reserve income, paying 90% directly to Hyperliquid. Previously, Coinbase split nearly all that revenue evenly with Circle. This shift incentivizes both firms to undercut each other to secure future distribution deals, creating a "prisoner's dilemma" that drives competition rather than cooperation.

The Hyperliquid arrangement highlights a growing conflict where Coinbase must offer better revenue terms to chase major distribution partners, directly cutting into Circle's share. Hyperliquid processed more than $150 billion in trading volume in July alone, with USDC balances swelling to roughly $6 billion, or about 8% of the entire circulating USDC supply. This scale pressures Circle and Coinbase to maintain similar terms as other large platforms emerge.

Market Contraction and Competition

USDC's circulating supply has declined from nearly $80 billion in March to around $73 billion, contributing to a broader $10 billion contraction in the stablecoin market since May. The latest setback came after the launch of Open USD, a consortium-backed stablecoin supported by Coinbase Global Inc and BlackRock Inc. This new entrant adds a heavyweight competitor to a market dominated by Tether’s USDT and raises concerns about pricing pressure as large financial institutions enter the sector.

JPMorgan cited the Hyperliquid agreement and weaker crypto markets as reasons for the earnings cuts, though higher interest rates offer some long-term support for USDC revenue. Separately, Mizuho downgraded Circle from Neutral to Underperform and lowered its price target to $50 from $85. While Mizuho acknowledged Circle's national trust bank charter from the Office of the Comptroller of the Currency as a positive, it warned investors may be overestimating the impact on growth given current competitive pressures.

Long-Term Opportunity and ETF Exposure

Despite the headwinds, ARK appears to be treating the recent selloff as a buying opportunity. Circle recently secured a national trust bank charter, allowing it to manage USDC reserves under federal oversight. The company remains a major player in the approximately $310 billion global stablecoin market, with USDC supply still roughly 17% higher than a year ago.

ARK’s repeated purchases have turned Circle into a meaningful holding, accounting for roughly 4.4% of the ARK Fintech Innovation ETF and about 3.4% of the flagship ARKK. The move highlights a broader trend where investors increase exposure to companies building digital finance infrastructure rather than just betting on crypto trading activity. This trend could also benefit other crypto-equity ETFs such as the Amplify Transformational Data Sharing ETF, Bitwise Crypto Industry Innovators ETF, and First Trust SkyBridge Crypto Industry & Digital Economy ETF.

Circle Internet Group Inc. President Heath Tarbert called the company’s newly approved national trust bank a "historic" milestone for the firm and the U.S. crypto industry, even as shares declined. The stock closed 4.8% lower on Monday and was down another 2.3% in premarket trading at the time of writing. The approval allows Circle to become the first digital asset company in U.S. history to operate a federal trust bank, placing the infrastructure of USDC, the world’s largest regulated stablecoin, under direct federal supervision.

OCC approval and business operations

The newly launched Circle National Trust Bank operates under the regulatory framework of the Office of the Comptroller of the Currency (OCC), which Tarbert described as the "gold standard" for financial regulation. The bank will not accept consumer deposits or issue loans. Instead, it will initially oversee USDC reserves and provide fiduciary digital asset custody services for Circle and its affiliates. The approved business plan indicates the bank may eventually extend custody services to a limited number of institutional customers, such as banks and regulated derivatives organizations.

USDC reserve management and regulation

USDC accounts for roughly 70% of regulated dollar stablecoin transaction volume and operates across 34 blockchain networks with about $73 billion in circulation. Tarbert emphasized that the recently enacted GENIUS Act provides the legal foundation for stablecoins to become a core part of the U.S. financial system. He urged lawmakers to pass the CLARITY Act, stating that legal certainty is essential for banks and financial institutions entering the digital asset sector. Tarbert argued that this regulatory framework is an upgrade to the U.S. payment system, allowing the country to lead the next generation of the internet.

Industry competition and context

Addressing competition from the newly announced OpenUSDT consortium, backed by Visa, Mastercard, Stripe, and Google, Tarbert welcomed additional entrants but highlighted USDC’s regulatory status, global adoption, and network effects as difficult to replicate. Circle submitted its application to the OCC on June 30, 2025, and received conditional approval in December 2025 alongside Ripple, BitGo, Fidelity Digital Assets, and Paxos. The queue has since widened to include Coinbase, Crypto.com, Payward, Charles Schwab, Morgan Stanley, Citadel-backed EDX, and World Liberty Financial.

Market movement and analyst data

Cathie Wood’s ARK Invest purchased $13.7 million worth of Circle shares on Thursday, the session before Friday’s announcement, while selling $9.8 million worth of Robinhood shares. CRCL sits 3% below its 20-day SMA at $72.92 and roughly 24% to 26% below the 50-day, 100-day, and 200-day SMAs all clustered in the low-to-mid $90s. A death cross formed in June when the 50-day SMA crossed below the 200-day, keeping the longer-term trend heavy.