American Financial Services Company Compass Point, known primarily for its stock research specialization, has downgraded its circle of USDC issuers to a selling rating.
This comes after the recent signing of law in the US, the Genius Act, a groundbreaking stable law that provides much needed clarity for the sector.
Compass Point expects Circle (CLRC) stock to hit just $130 (a whopping 37% reduction).
Following a major downgrade, shares in major Stablecoin issuers are currently down almost 9%.
According to Compass Point, Circle's current valuation cannot be justified by its revenue model and competitive positioning.
The downgrade that heats up right after the very important Stablecoin bill seems counter-intuitive given that the very well-known law is expected to give a significant boost to the Stablecoin sector.
Ironically, some analysts consider the passing of genius to be bad news for the company as it leads to market saturation. Circle's USDC already needs to compete with Ripple's RLUSD and other startups.
However, the bill is expected to create even more competition given that it will clarify how big banking institutions ultimately enter the stubcoin space under federal regulations. Such key players with a large user base and significantly lower customer acquisition costs could potentially emerge as new dominant players in the space.
In addition, the bill will also increase circle compliance costs.
Circle is currently pursuing a National Trust Bank license, and Ripple is doing the same.
