Open USD Challenges Circle’s Model but Faces a Difficult Adoption Test

Circle shares fell 16% on Tuesday after Open Standard announced Open USD, a planned stablecoin backed by a consortium of more than 140 companies, including Stripe, Coinbase, Visa, Mastercard and BlackRock. The project aims to compete with Circle’s USDC by distributing reserve income to partners instead of retaining it primarily at the issuer level.

The model directly challenges an important part of Circle’s economics and could give exchanges, payment processors and other distribution platforms a stronger incentive to promote Open USD. Stripe’s range of financial products and the consortium’s prominent membership make the initiative a credible competitor, although Open USD is not expected to launch until later this year.

Analysts cautioned that the market reaction may have run ahead of the evidence. Paxos’ similarly structured Global Dollar Network has reached about $3 billion in supply since launching in late 2024, compared with roughly $73 billion for USDC and $145 billion for Tether’s USDT, according to CoinDesk data. That gap illustrates how difficult it can be to turn institutional partnerships into meaningful usage.

Open Standard also has unresolved operational questions. Its announcement did not fully explain the consortium’s ownership, the issuer’s licensing framework, which blockchains will support Open USD or how reserve income will be divided. Differing incentives among a large group of participants could further complicate efforts to build scale.

The launch has also renewed attention on Circle’s relationship with Coinbase. The companies jointly established the consortium that began issuing USDC and continue to share reserve-related economics under a commercial agreement reportedly due for renewal in August. More broadly, Open USD reflects a stablecoin market in which exchanges, wallets, payment companies, custodians and blockchain networks may play an increasingly important role alongside issuers.