Open USD Poses Biggest Threat Yet to Circle's USDC, CoinShares Says

A report by crypto asset manager CoinShares has identified the new stablecoin project, Open USD (OUSD), as the most significant threat to Circle's popular stablecoin, USDC, to date. Backed by the OpenStandard consortium, Open USD plans to deviate from the traditional stablecoin issuer model by distributing reserve income to participating firms, retaining only a management fee. This approach could potentially squeeze Circle's profit margins and increase the costs associated with maintaining USDC circulation.

Open USD is supported by a powerful consortium of over 140 payment and crypto firms, including industry giants like Visa, BlackRock, Coinbase, Mastercard, and Stripe. The project is slated for a launch in the second half of 2026, with Solana as its initial blockchain. Unlike the conventional model where the issuer retains all revenue, Open USD aims to redirect a substantial portion of the reserve income to partner businesses that facilitate its distribution and integration. This design is intended to make Open USD an attractive option for payments companies, banks, and fintechs by aligning economic incentives.

The CoinShares report highlights that Circle's stock experienced a decline of over 17% on the day Open USD was announced. While technical selling related to the Russell index reconstitution might have amplified this drop, it underscores the market's reaction to the perceived threat Open USD poses to Circle's business model. USDC's circulating supply has already decreased from nearly $80 billion in March to approximately $73 billion, reflecting the intensifying competition in the stablecoin market. Furthermore, the impending renegotiation of Coinbase's revenue-sharing agreement with Circle in August 2026 could see Open USD bolstering Coinbase's bargaining power.

This development signals a potential shift in the stablecoin market from single-issuer dominance towards models based on multi-party collaboration. Open USD's core objective is to integrate stablecoins further into mainstream payments and enhance economic incentives for businesses. However, CoinShares emphasizes that crucial details such as Open USD's reserve composition, custodian arrangements, and long-term fee structures remain undisclosed. Conversely, the report suggests that Open USD is unlikely to pose a significant threat to Tether (USDT), given Tether's strong foothold in emerging markets and its substantial offshore dollar liquidity.

Market analysts and CoinShares advise investors to closely monitor whether Circle modifies its distribution strategy and if Open USD's high-profile backing translates into actual user adoption. While Open USD is considered a serious contender, USDC retains significant advantages built over years, including deep liquidity, extensive integrations across numerous exchanges and DeFi protocols, and a robust regulatory track record—assets that a new stablecoin cannot easily replicate from day one. This indicates that competition in the stablecoin sector will be shaped not only by supply size but also by ecosystem integration and business model innovation.