Circle's Stock Declines as Open USD Stablecoin Launches with Major Backers

New Stablecoin Launch Affects Circle's Market Value

The recent introduction of Open USD (OUSD), a new stablecoin developed by a consortium of over 140 companies including Coinbase, Visa, and Mastercard, has significantly impacted the stock performance of Circle, the issuer of USDC. Circle's shares dropped nearly 16% to around $63.99, marking a substantial 39% decline over the past month.

Open USD was launched by Open Standard, an independent organization, to tackle persistent issues in the stablecoin market, such as high fees for minting and redemption, and the retention of interest earnings by issuers. The new stablecoin allows businesses to mint and redeem without fees and shares reserve earnings with partner companies after a minor management fee.

Governance of Open USD will be conducted by a board comprising representatives from partner firms, promoting a decentralized approach rather than control by a single corporation. Zach Abrams, CEO of Open Standard, emphasized the need for a stablecoin solution that is open and cost-effective for businesses. He stated that existing stablecoins do not fully meet the operational needs of companies.

The initiative has attracted backing from major payment networks and financial institutions, with executives viewing it as a step towards creating a neutral financial infrastructure. BlackRock's Samara Cohen noted this launch as a positive development, while BNY forecasts the stablecoin market could grow to $1.5 trillion by 2030. Open USD is expected to be operational later this year.