Shares of Circle fell sharply by up to 18% following the announcement of the Open USD stablecoin, a new project backed by more than 140 major institutions including Visa, Mastercard, Stripe, Coinbase, and BlackRock. The market reaction focused on concerns that Circle's revenue model, which relies heavily on net interest margin from USDC reserves, could face serious disruption.
The Open USD stablecoin introduces a revenue-sharing structure where income generated from reserves is distributed among ecosystem partners instead of being retained solely by the issuer. This contrasts directly with USDC's model, where Circle keeps all the reserve income. Investors interpreted this as a structural threat to Circle's profitability rather than an immediate competitive risk to USDC's market share, since Open USD has not yet gained significant circulation.
Institutional Backing and Member Discrepancies
The Open Standard alliance publicized its launch as a coalition of financial giants, listing over 140 institutions spanning payment networks, crypto exchanges, and asset managers. The inclusion of household names evoked comparisons to the Libra project of 2019, which attempted to build a new global digital currency.
However, unlike Libra, Open USD is positioned as a U.S. dollar stablecoin focused on reshaping stablecoin economics within a partner ecosystem rather than creating a new currency. Adding complexity, some companies listed as official alliance members, such as Samsung Electronics, Dunamu, and K Bank, reported no formal discussions or were only preliminarily informed about their involvement. Samsung explicitly denied any formal consultation.
This discrepancy raises questions about the coordination and communication within the alliance. Despite that, the market remains unsettled by the potential impact of Open USD's revenue-sharing model on Circle's business and USDC's net interest margin earnings.
This material is for informational purposes and does not constitute financial advice.
