Circle , the issuer of the second biggest stablecoin, is becoming a foundational layer of the digital asset landscape and the market is underestimating how big that opportunity could be, according to Wells Fargo. The firm on Tuesday reiterated its overweight rating on the stock and raised its price target to $142 from $111, implying about 24% upside from current levels. "CRCL provides infrastructure for USDC, which has evolved to become a critical enabler of a broader financial ecosystem, bridging traditional financial, payments & crypto," Wells Fargo analyst Cassie Chan said in a note. "While the majority of stablecoin usage is currently within existing crypto users in the crypto-verse, there continues to be a large opportunity for existing legacy financial infrastructure to adopt blockchain technologies, and stablecoins could represent a cheaper, more transparent way to move digital money at scale," she added. The comments come shortly after lawmakers over the weekend struck a compromise on the market structure bill known as the CLARITY Act, preserving stablecoin reward programs under certain conditions. The updated language restricts crypto companies from paying savings account-like interest or yield to users on passive stablecoin deposits but allows rewards as usage-driven incentives that could be tied to activity like trading, transactions or staking. Shares gave back about 5% Tuesday after surging nearly 20% on the news in the previous session. Wells Fargo's view of Circle ties into a broader theme seen across the crypto sector: although Circle is not an exchange, it's leaning harder into the image of a more sober, infrastructure-focused financial firm. Similarly, exchanges, have been trying to distance themselves from the casino-like image fueled by speculation and market cycles, aiming to compete in the big leagues as highly regulated institutions while building steadier, more reliable growth and revenue streams. To be sure, Circle still depends heavily on interest rates that affect its reserve income, and while the crypto industry is cheering the latest developments around the CLARITY Act, how the legislative process plays out could go either way for Circle. "While interest earned on USDC reserves is still CRCL's main source of revenue, USDC has evolved to support a broader range of functions responsible for the movement of value across networks and efficient coordination of financial flows," she added. "As such, CRCL has positioned itself as a critical enabler of blockchain-based tech that bridges traditional financial systems, payments & crypto." —CNBC's Michael Bloom contributed reporting.
