More than 140 companies including Visa, Mastercard and BlackRock have backed a rival stablecoin that shares reserve income with partners, directly challenging the business model that generates the bulk of Circle's revenue.
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Circle shares tumble 18% as 140-partner stablecoin threatens revenue model
More than 140 companies including Visa, Mastercard and BlackRock have backed a rival stablecoin that shares reserve income with partners, directly challenging the business model that generates the bulk of Circle's revenue.
Circle Internet Group's stock fell 18% to $62 on July 2 after Open Standard launched Open USD with backing from more than 140 institutional partners, including Visa, Mastercard, BlackRock, Coinbase and Stripe. The drop compounded a 32.8% decline over the prior 30 days after Circle was removed from several Russell indexes on June 26.
"Existing stablecoins have great strengths, but to use them at scale, businesses need something that's open, low-cost, high-throughput, broadly accessible, and aligned to their interests," Zach Abrams, founding chief executive officer of Open Standard, said in a statement. Abrams previously founded Bridge, the stablecoin platform acquired by Stripe.
OUSD allows businesses to mint and redeem tokens for free with no volume caps, while the reserve yield from US Treasury debt backing the token flows to partners minus a small management fee. Circle's USDC and Tether's USDT, by contrast, keep the interest on reserves as issuer revenue — a model that generated the majority of Circle's income from the $312 billion stablecoin market, where USDC holds about 25% and USDT 62%, per CoinGecko data.
The competitive threat to Circle is structural rather than immediate. OUSD has not yet launched — it is expected to go live later this year — but the consortium's breadth signals that the largest payment networks, asset managers and crypto firms have aligned behind a shared infrastructure model that bypasses the issuer-keeps-the-float economics. Coinbase, which co-founded the Center Consortium with Circle in 2018 and was paid roughly $209.9 million by Circle to dissolve it in 2023, is now a founding partner of OUSD.
The partner list reads as a diagram of the financial stack. BlackRock, the world's largest asset manager, stands to manage the Treasury reserves that back the coin. Shopify and Mercado Pago bring merchant distribution. BNY, Standard Chartered and DBS provide custody and settlement. Visa and Mastercard, which earn margins on the card rails that stablecoins could undercut, have chosen to join the coalition rather than defend the existing system. Ripple joined as a day-one partner while maintaining its own stablecoin, RLUSD.
For Circle, the risk is that the customers who use USDC at scale are now co-owners of a competing token. The stock partially rebounded on Thursday, recovering some of the 18% loss, but the structural pressure on Circle's revenue model remains. Open Standard's governance board, drawn from partner companies rather than a single corporate parent, is designed to prevent the single-entity control that has made USDC and USDT vulnerable to this coalition.
This article is for informational purposes only and does not constitute investment advice.
[1] Circle shares tumble 18% on Open USD stablecoin launch before Thursday rebound[2] OUSD Launch Sends Circle Stock Down 17% as 140+ Partners Back Yield-Sharing Rival[3] Circle Stock Dives as Coinbase, BlackRock and Visa Back Open USD Stablecoin[4] Look At Who Joined Open USD To Understand Where Money Is Going[5] OUSD Is Bad For Circle (Rating Downgrade)
