Circle Applies for National Trust Charter Amid Stock Price Decline and JPMorgan’s Bearish Outlook

Circle Internet Group, Inc. (NYSE: CRCL), known as the "first stablecoin stock," made headlines with its remarkable post-IPO performance, as its share price skyrocketed from $31 at listing to a peak of $298, achieving an extraordinary 861% increase within just two weeks.

However, the company has recently faced significant challenges, with its stock experiencing a sharp decline of over 30% in the past five days. Amid this backdrop, Circle has formally submitted an application to the Office of the Comptroller of the Currency (OCC) to establish a national trust bank.

As the market evaluates whether this development could potentially drive a recovery in its stock price, JPMorgan has added to the pressure by issuing a bearish outlook on Circle’s valuation, raising questions about its future growth trajectory.

Circle’s First National Digital Currency Bank, N.A.

On June 30, 2025, Circle announced its application for a national trust charter, aiming to create the First National Digital Currency Bank, N.A. The proposed charter would allow Circle to directly manage USDC reserves, offer institutional-grade custody services for tokenized assets, and expand its regulatory compliance framework.

Circle Co-Founder, Chairman, and CEO Jeremy Allaire commented, “Establishing a national digital currency trust bank of this kind marks a significant milestone in our goal to build an internet financial system that is transparent, efficient, and accessible. By applying for a national trust charter, Circle is taking proactive steps to further strengthen our USDC infrastructure and align with emerging U.S. regulations for dollar-denominated payment stablecoins.”

This initiative aligns with Circle's broader mission to integrate digital assets into the U.S. financial system while meeting requirements under the GENIUS Act, a proposed piece of legislation aimed at more comprehensively regulating digital assets in the United States.

Stock Price Decline and JPMorgan’s Bearish Outlook

Circle’s stock price has plummeted sharply in recent days, dropping from $240 to $181, marking a 30% decline over five days. This downturn follows a period of unprecedented highs, with Circle’s stock reaching $300 on June 23.

Analysts attribute the decline to growing concerns over Circle’s overvaluation and market competitiveness.

JPMorgan recently initiated coverage of Circle with an "Underweight" rating and a December 2026 price target of $80, significantly lower than its current valuation.

Why JPMorgan is Bearish on Circle

JPMorgan’s bearish outlook on Circle is based on several critical factors:

1. Valuation Concerns:

   Circle’s current market capitalization of $48 billion is seen as excessively high compared to JPMorgan’s projected valuation of $21 billion by 2026. The bank’s model applies a 40–45x P/E ratio based on 2027 earnings, suggesting that the stock price reflects overly optimistic scenarios.

2. Revenue Model Dependency:

   Circle’s revenue heavily relies on interest income from USDC reserves, which accounts for 97% of its earnings. A potential decrease in Federal Reserve interest rates (-100 bps) could result in a $200 million EBITDA drop, raising questions about the sustainability of its profitability.

3. Competitive Pressures:

   The entry of traditional banks and fintech firms into the stablecoin market poses a significant threat to Circle’s first-mover advantage. JPMorgan highlighted the rise of tokenized money market funds (MMFs) as an alternative to USDC, which could dilute Circle’s market share.

4. Regulatory Challenges:

   Regulatory frameworks like MiCA in Europe may require stablecoin issuers to hold higher capital reserves, potentially limiting Circle’s growth. The development of central bank digital currencies (CBDCs) adds another layer of uncertainty to Circle’s global expansion plans.

5. Future Revenue Diversification:

    JPMorgan emphasizes the need for Circle to transition from an interest-rate-dependent model to a take-rate model. This would involve leveraging USDC as a default settlement currency for B2B e-commerce and SME cross-border payments. Failure to achieve this transformation could render Circle less competitive in the stablecoin market.