Morgan Stanley downgraded Circle Internet shares to underweight from equal-weight on Monday, according to CoinDesk, and cut its price target to $38 from $106. The report said Circle's stock slid about 6% after the note, reflecting investor concern about the longer-term earnings outlook for the company behind USDC.

The call lands at a sensitive point for public stablecoin issuers. Circle has benefited from the market's attention on regulated dollar tokens, but its business remains tied to reserve income, distribution costs, interest-rate assumptions, and competition from banks, fintechs, and crypto-native rivals.

Circle describes USDC as a fully reserved digital dollar issued by the company for payments and liquidity across public blockchains. That positioning gives the stock a direct link to stablecoin adoption, but it also exposes public-market investors to questions about how much of that growth can translate into durable margins.

The downgrade does not change USDC's operating status or Circle's role in the stablecoin market. It does show that equity analysts are starting to separate stablecoin volume growth from the issuer's earnings power. For crypto infrastructure investors, the sharper question is no longer whether dollar tokens will keep spreading, but who captures the economics as they become more common.