CoinDesk
Open USD, the bank-backed consortium stablecoin under development by Open Standard, poses the most credible threat yet to Circle Internet's USDC because it attacks the economics at the heart of the issuer's business, crypto asset manager CoinShares said in a Monday report. Unlike conventional stablecoin issuers that keep the income generated by their reserves, Open USD plans to distribute reserve yield to participating businesses and retain only a management fee, a model CoinShares says could squeeze Circle's margins while raising the cost of maintaining USDC distribution across partners.
Backed by more than 140 companies including BlackRock, Coinbase, Mastercard, Stripe and Visa, Open USD is targeting a second-half 2026 launch. The model also strengthens Coinbase's leverage ahead of the August 18 renewal of its revenue-sharing agreement with Circle, under which the exchange receives roughly half of USDC's reserve income.
Why it matters
The report lands at a sensitive moment for Circle. USDC's circulating supply has slipped to about $73 billion from nearly $80 billion in March, trimming its share of the roughly $312 billion stablecoin market as regulated competitors press in. Circle shares fell more than 17% on the day Open USD was announced, though CoinShares attributes part of that move to technical selling tied to a Russell index reconstitution.
The structural risk is the yield-share model itself. If partners capture the reserve income Circle now keeps, the incentive to route flows through USDC weakens at exactly the moment Circle's distribution agreements are coming up for renewal. CoinShares analyst Luke Nolan wrote that, if successful, Open USD could pull stablecoins further into mainstream payments by making the economics more attractive to the businesses actually using them.
Market impact
Mizuho moved in the same direction on Tuesday, downgrading Circle to underperform from neutral and cutting its price target to $50 from $85, arguing the rival's model threatens long-term economics. Circle shares were 3.8% higher in early trading at $65.61.
Still, CoinShares flags reasons not to overreach the bearish read.
Frequently asked questions
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What is Open USD and how does it differ from USDC?
Open USD is a consortium-backed dollar stablecoin under development by Open Standard, with more than 140 backers including BlackRock, Coinbase, Mastercard, Stripe and Visa. Its key difference is that it plans to distribute reserve yield to participating businesses and retain only a management fee, rather than keeping…
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When is Open USD expected to launch?
The consortium is targeting a second-half 2026 launch, according to CoinShares. Reserve structure, fee model and other key details have not yet been disclosed.
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Why does Open USD threaten Circle's USDC business?
CoinShares argues Open USD threatens USDC by sharing the reserve yield that Circle currently keeps, which could compress Circle's margins and raise the cost of maintaining USDC distribution across partners. The model also strengthens Coinbase's leverage ahead of the August 18 renewal of its USDC revenue-sharing…
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How has the market reacted to the Open USD announcement?
Circle shares fell more than 17% on the day Open USD was announced, though CoinShares attributed part of the move to technical selling tied to a Russell index reconstitution. Mizuho followed on Tuesday by downgrading Circle to underperform and cutting its price target to $50 from $85.
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Could Open USD also threaten Tether's USDT?
CoinShares said Open USD is unlikely to pose a major threat to Tether. USDT's dominance in emerging markets and offshore dollar liquidity gives it a different competitive moat that a yield-sharing model aimed at payments partners does not directly attack.
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