Key Takeaways
- Circle (CRCL) shares tumbled over 13% to approximately $65, marking a four-month low following the announcement of a competing stablecoin.
- More than 140 major corporations, including Visa, Stripe, Mastercard, BlackRock, and Coinbase, revealed plans for Open USD, a new stablecoin initiative.
- Open Standard will oversee Open USD operations, with leadership from Zach Abrams, who previously co-founded Bridge before its Stripe acquisition in 2024.
- Open USD distinguishes itself from Circle’s USDC by offering free minting and redemption, plus sharing reserve interest income with consortium members.
- Circle’s CEO Jeremy Allaire dismissed concerns, asserting that USDC maintains its position as the most reliable stablecoin while embracing competitive dynamics.
Shares of Circle Internet Group experienced a steep decline on Tuesday. The stock plummeted as much as 14% during trading before closing down approximately 13%, hovering around $65—its weakest performance since the end of February.
The sharp decline came after reports emerged that a consortium of over 140 major corporations is preparing to introduce a rival stablecoin. Dubbed Open USD, the new digital currency is positioned as a direct challenger to Circle’s flagship USDC token.
Coinbase shares similarly retreated on the announcement, falling roughly 6% to $142.37. This decline carries particular significance given that Coinbase originally partnered with Circle to create USDC and continues to receive a portion of revenue generated by the stablecoin.
The Coalition Behind Open USD
The consortium backing Open USD reads like a who’s who of finance and technology. Founding members include payment giants Visa, Mastercard, and Stripe, alongside financial heavyweights BlackRock and Coinbase. Traditional banking institutions such as BNY, Standard Chartered, and U.S. Bank have also joined the initiative.
The technology sector is well-represented too. Google and IBM have both committed to the project, along with prominent cryptocurrency platforms including Ripple, Solana, Polygon, and Aave.
An independent entity named Open Standard will manage the initiative. Zach Abrams, who previously co-founded Bridge—a stablecoin infrastructure company that Stripe purchased in 2024—will lead operations.
Abrams positioned the initiative as addressing market gaps, stating that while current stablecoins have merit, enterprises require an open, affordable solution that aligns with their objectives at scale.
Industry observers weren’t completely blindsided. A CoinDesk investigation published earlier this month had already revealed that Stripe, Visa, and Mastercard were developing a competing stablecoin platform, with indications that Coinbase might participate.
Open USD’s Business Model Challenges Circle
The operational framework represents a significant departure from Circle’s revenue approach. Open USD will allow companies to create and redeem tokens without incurring any transaction fees.
The treatment of reserve earnings highlights another key distinction. Rather than concentrating interest generated from reserves within a single entity, Open USD intends to distribute yield among consortium partners following operational expense coverage.
This structure directly threatens Circle’s primary revenue stream. Circle generates substantial income by investing USDC reserves in short-duration Treasury securities and retaining most of the interest—a model Open USD explicitly aims to disrupt.
Decision-making authority will be distributed among members rather than concentrated with a sole issuer. This approach resembles USDG, another consortium-backed stablecoin supported by Paxos, Robinhood, Kraken, and Galaxy Digital.
USDC presently maintains approximately $73.6 billion in total circulation, establishing it as the leading U.S.-domiciled stablecoin. Tether’s USDT commands greater market share globally with roughly $145 billion in circulation, though it focuses primarily on cryptocurrency trading and developing markets.
For Coinbase, the implications are substantial. Revenue connected to USDC represented 44% of Coinbase’s subscription and services division during the most recent quarter.
Circle CEO Jeremy Allaire took to X on Tuesday, characterizing USDC as “the most trusted, widely adopted, institutional-ready stablecoin in the world.” He emphasized that Circle collaborates with thousands of institutional partners.
A Coinbase representative echoed this sentiment, suggesting that additional stablecoin issuers and applications expand the overall market for stablecoins, while affirming that USDC remains central to its platform strategy.
Open Standard’s announcement indicates that Open USD is scheduled to become operational later this year.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
