Summary
- A coalition of over 140 firms, including Coinbase and Visa, has launched Open USD, an independent stablecoin managed by Open Standard.
- This new stablecoin offers free minting and redemption, shared reserve earnings with partner companies (with a minor fee), and governance by a board of partner entities.
- Following the announcement, Circle's stock saw a nearly 16% drop, marking a 39% decline over the past month.
A new stablecoin named Open USD (OUSD) has been introduced by a consortium of more than 140 companies, including Coinbase, Visa, Mastercard, Stripe, and BlackRock, aiming to establish a decentralized digital payments system.
This development has negatively affected the stock value of Circle (CRCL), the issuer of the USDC stablecoin, which plunged approximately 16% to about $63.99, according to Yahoo Finance. Over the past month, Circle's shares have dropped by 39%. Although Coinbase is a significant partner of Circle, it is also supporting the Open USD initiative.
Open USD was introduced on Tuesday by Open Standard, a newly established independent operator, in response to issues that have plagued the stablecoin sector, such as high minting and redemption fees, issuers retaining interest from reserves, and inadequate input from businesses utilizing the coins.
The organization, led by CEO Zach Abrams—who previously founded the stablecoin company Bridge, acquired by Stripe—promises that businesses will be able to mint and redeem Open USD without any fees or volume restrictions. Earnings from reserves will be distributed among partners instead of being retained by the issuer, after deducting a management fee.
Governance will be managed by a board consisting of representatives from the partner companies, rather than a single corporate entity. This structure is seen as crucial for achieving widespread adoption, according to the organizers.
"While existing stablecoins have their advantages, businesses require a solution that is open, cost-effective, high-capacity, widely accessible, and aligned with their needs to utilize them effectively," Abrams stated.
The initiative has garnered support from prominent payment companies like Visa, Mastercard, and American Express, financial institutions such as BlackRock, BNY, and Standard Chartered, as well as tech giants like Google and Shopify, and cryptocurrency firms including Coinbase and Ripple.
Executives view this effort as a means to create neutral infrastructure similar to the early days of the internet. Samara Cohen from BlackRock referred to it as "a positive move towards providing businesses with greater options," while BNY anticipates the overall stablecoin market could reach $1.5 trillion by 2030.
Open USD is anticipated to be operational later this year.