The launch of Open USD (OUSD), a new stablecoin backed by more than 140 financial, tech and crypto companies, has sparked debate over whether the project could become the first upstart to challenge flagship stablecoins, such as USDC.
Open USD Launch Sparks Debate over Circle's Stablecoin Lead
2 July 2026 - 00:55 CEST
By Jona Jaupi
USDC is currently the second-largest stablecoin – a type of digital asset that maintains a steady value by being pegged 1:1 to a fiat currency, like the US dollar – with a market capitalization of over $73bn, according to DeFiLlama.
Circle shares (CRCL) fell 1% to $61.95 on 1 Jul after tumbling nearly 18% the previous day following the launch of OUSD, a stablecoin backed by companies including Visa, Mastercard, Stripe, BlackRock, Google and Coinbase.
The sell-off reflected concerns among some analysts and investors that OUSD could be the first new stablecoin to pose a threat to Circle, which itself has been gaining ground on Tether's USDT, the largest stablecoin, holding 59% of the sector's $311bn market cap.
Others, however, say Circle still has major advantages that will be difficult for newcomer stablecoins to match.
What is Open USD?
Open USD is designed for payments and moving money. Unlike Circle's USDC or Tether's USDT, OUSD will not be controlled by one company. Instead, OUSD will be managed by a consortium, or a group of companies that share decision-making and revenue. The stablecoin is expected to launch later this year.
Some proponents of OUSD say the model could encourage more payment companies and financial firms to adopt the stablecoin because they would also share in the revenue it generates.
The 'dominant' stablecoin
In a note to clients, investment bank Bernstein described Open USD as the strongest new competitor Circle has faced so far, citing the large number of companies involved.
However, the firm also noted that more than one stablecoin could succeed as the market grows.
Bernstein added that Circle's one major advantage is that USDC is already widely used across crypto markets and platforms, making it all the more difficult for competitors to catch up.
According to the bank, USDC processed about $5.3tn in transactions during the first half of 2026, already more than the roughly $4.5tn it processed during all of 2025.
Notably, Bernstein focused its analysis on Circle because the company is publicly listed, leaving unanswered how the bank views any competitive threat OUSD may pose to privately held Tether's USDT.
Circle pushes back
Circle CEO Jeremy Allaire rejected the idea that Open USD will quickly become a major competitor. In a 1 Jul post on X, he said successful stablecoins take years to build because they rely on trust, widespread adoption and a large network of users and businesses.
"Stablecoin networks are platform and network effect businesses that are established over a long period of time," Allaire wrote.
He also questioned whether the consortium could move quickly enough to compete. "Large groups of large companies coordinate poorly, have misaligned incentives, slow things down and rarely create the space for real durable innovation and competitiveness," he wrote.
Allaire also challenged one of Open USD's main selling points, sharing revenue with partners.
He noted that Circle already shares a lot of its reserve income with distribution partners and argued that giving away too much revenue would leave too little money to continue investing in the network. "Giving away all the income is a recipe for starving an infrastructure," he wrote.
