FinanceOpen USD Threatens Circle's USDC, According to CoinShares
Circle's margins may be pressured if the consortium-backed stablecoin shares reserve income with partners upon its 2026 launch.
By Will Canny, AI Boost|Edited by Sheldon Reback Jul 15, 2026, 2:03 p.m. 2 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on
Open USD poses a significant challenge to Circle's USDC, CoinShares reports. (Circle)SummaryShow- According to CoinShares, Open USD poses a direct challenge to Circle by redistributing income from reserves to partners, potentially undermining USDC's economic model.
- Open USD, which includes over 140 companies like BlackRock, Coinbase, Mastercard, Stripe, and Visa, is anticipated to launch in the latter half of 2026.
- Despite the emerging threat, CoinShares noted that USDC's established liquidity and existing integrations may be difficult for new entrants to match.
Open USD, a stablecoin initiative backed by a consortium of banks, is regarded as the most formidable competitor to Circle Internet's (CRCL) USDC, as stated in a recent report from crypto asset manager CoinShares.
In contrast to conventional stablecoin issuers that retain income from their reserves, Open USD intends to allocate the earnings to its partner businesses, keeping only a management fee. CoinShares highlighted that this approach could pressure Circle's profit margins and increase the expenses associated with USDC distribution.
“If successful, Open USD could further integrate stablecoins into mainstream payment systems by enhancing the economic and governance appeal for the businesses utilizing them,” analyst Luke Nolan remarked.
Developed by Open Standard, this institutional-focused stablecoin is supported by more than 140 companies, including BlackRock (BLK), Coinbase (COIN), Mastercard (MA), Stripe, and Visa (V), with a targeted launch in the second half of 2026. However, specific details regarding its reserve structure and fee arrangements remain undisclosed.
The strategy also strengthens Coinbase's position as it approaches the renewal of its revenue-sharing agreement with Circle, which allows the exchange to receive approximately half of USDC's reserve income, according to the report.
USDC's circulating supply has decreased to around $73 billion from nearly $80 billion in March, reducing its share in the approximately $312 billion stablecoin market amid increasing competition from newly regulated issuers.
Circle's stock fell over 17% following the announcement of Open USD, although CoinShares suggested that the drop was likely exacerbated by technical selling related to the Russell index rebalancing.
Nonetheless, the report contended that the market may be reacting excessively. Open USD has yet to be launched, critical details are still pending, and Circle maintains a significant edge through USDC's extensive liquidity and established integrations across exchanges, DeFi, and payment systems.
Open USD is not expected to significantly threaten Tether, which holds a unique competitive advantage in emerging markets and offshore dollar liquidity, making USDT the largest stablecoin by a considerable margin, the report added.
For now, investors should monitor whether Circle alters its distribution strategy and assess Open USD's ability to convert its notable backing into market adoption, according to CoinShares. Until then, the project stands as a plausible yet untested rival to USDC.
CoinShares is not the only entity acknowledging the challenge posed by Open USD. Mizuho, a Japanese investment bank, downgraded Circle to underperform from neutral and reduced its price target to $50 from $85 in a client note on Tuesday, citing concerns that the new competitor's business model could jeopardize the long-term economics of the stablecoin issuer.
In early trading, Circle shares rose by 3.8%, reaching $65.61.
Read more: Mizuho downgrades Circle to underperform, cuts price target to $50 on Open USD threat
CircleStablecoinsAI Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk's full AI Policy.Latest Crypto News- 1The privacy paradox of protecting kids online6 minutes ago
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Gate Leads Spot Market Share Gains as CEX Volumes Rise for First Time in Five Months
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CEX trading volumes rose for the first time in five months in June, with spot climbing 15.3% to $1.11T and RWA perpetual volumes surging to a record $311B.
By CoinDesk ResearchJul 13, 2026CEX trading volumes rose for the first time in five months in June, with spot climbing 15.3% to $1.11T and RWA perpetual volumes surging to a record $311B.
Why it matters:
CEX trading volumes rose for the first time in five months in June, with spot climbing 15.3% to $1.11T and RWA perpetual volumes surging to a record $311B.
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