Circle Stock Falls as Rivals Back Open USD Stablecoin

More than 140 companies, including Visa, Mastercard, Stripe, BlackRock, and Coinbase, have joined forces to launch a new stablecoin called Open USD (OUSD), designed to give businesses a shared payments network that isn't controlled by any single issuer. The announcement sent shares of rival stablecoin issuer Circle tumbling nearly 16% in a single trading session.

At a Glance

• Open USD was unveiled by a new independent operator called Open Standard, led by CEO Zach Abrams.
• Circle's stock dropped almost 16% to $63.99 on the news, extending its monthly decline to 39%.
• Backers include Visa, Mastercard, American Express, BlackRock, BNY, Standard Chartered, Google, Shopify, Coinbase, and Ripple.
• Businesses can mint and redeem OUSD for free with no volume limits, and partners share reserve interest income.
• The coin is expected to launch later this year.

Why Circle's Stock Took a Hit

Circle, the company behind USDC, saw its shares slide sharply after the Open USD news broke, closing at a recent price of $63.99 according to Yahoo Finance. That single day drop of nearly 16% capped off a rough stretch for the stock, which has now fallen 39% over the past month. Coinbase, notably, is both a close partner of Circle and one of the companies backing this new rival coin, a dual role that says something about how fluid alliances have become in the stablecoin business.

What Problem Open USD Is Trying to Solve

Stablecoins have grown into a massive part of the crypto economy, but the industry has drawn steady complaints as it scaled up. Businesses have grumbled about steep fees for minting and redeeming tokens in bulk, about issuers keeping all the interest earned on the reserves backing those coins, and about having little say in how the coins they rely on are actually run.

Open Standard, the newly formed entity steering the project, says Open USD is built to fix those specific pain points. Companies will be able to mint and redeem the coin for free, with no caps on volume. Rather than the issuer alone pocketing the yield on reserves, partner companies will share in those earnings, minus a management fee. Zach Abrams, the founding CEO, previously started Bridge, a stablecoin company that Stripe acquired, so he's seen the industry's friction points from the inside.