Mizuho Warns AI Personal Assistants Could Erode Circle Reserve Revenue

Investment bank Mizuho reiterated an Underperform rating on Circle Internet Group (CRCL) on Oct. 26, warning that consumer-facing artificial intelligence agents pose a structural challenge to its stablecoin revenue model ¹². The bank's simulation tested how AI personal assistants, such as Meta's Muse, handle inquiries regarding optimal cash management ¹². According to the research note, the tested software directed users toward higher-yielding fiat accounts backed by the Federal Deposit Insurance Corporation (FDIC) rather than maintaining balances in $USDC ¹².

Mizuho projected that accelerated AI agent adoption could prompt an outflow of $4 billion to $9 billion from USDC's circulation over the medium term ¹². Under this scenario, the bank modeled approximately $7 billion shifting into traditional banking products and $2 billion moving into competing, yield-bearing stablecoins ¹. Such an outflow would result in a 10% to 20% decline in Circle's reserve income, the yield generated from the short-term U.S. Treasuries and cash reserves backing the digital asset ¹². As of the second quarter, 17% of USDC was held directly on Circle's platform earning zero customer yield, while Coinbase held 30% and other venues held 53% ¹.

Exposure to Interest-Bearing Reserves

The analyst warnings underscore Circle's direct sensitivity to total circulating supply. The company generated 95.2% of its second-quarter revenue from interest accrued on reserve assets ¹. Circle reported $1.4 billion in top-line revenue across the first half of 2026, retaining roughly $0.07 in net profit per dollar earned as USDC settled over $36 trillion in cumulative on-chain volume during that window ¹. Circulation stood at roughly $73 billion on Oct. 8, down slightly from $73.3 billion on June 30 ¹.

Broader macroeconomic research has raised similar friction points regarding deposit substitution. A Bank for International Settlements working paper noted that commercial banks retain leverage over digital asset adoption velocity through adjustments to retail deposit yields ². Despite earlier gains under European regulatory frameworks, where USDC Surpasses Tether in Euro Trading Volume Following MiCA Shift following its qualification as a significant asset under MiCA, domestic yield competition remains a factor ¹. Circle is scheduled to release its third-quarter financial results on Nov. 4 before U.S. markets open ¹².