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Circle Internet Group had a rough start to the week. The USDC issuer watched its stock crater as much as 18% on Monday after a coalition of corporate heavyweights announced Open USD, a new dollar-pegged stablecoin designed to undercut Circle’s entire revenue model. By Thursday, shares had clawed back much of the loss, but the message from the market was clear: Circle’s near-monopoly comfort zone just got a lot less comfortable.
The sell-off wiped out billions in market value intraday, a rather dramatic response to a stablecoin that hasn’t even launched yet. But when the consortium behind it includes Visa, Mastercard, Stripe, Coinbase, BlackRock, BNY, Google, and Shopify, among more than 140 total firms, the market’s nerves start to make sense.
What Open USD actually changes
Here’s the thing about Circle’s business. It’s beautifully simple, almost suspiciously so. The company holds reserves backing USDC, parks those reserves in US Treasuries, and collects the interest. That interest income accounts for roughly 96% of Circle’s total revenue. USDC’s market cap sits at approximately $73 billion, which means we’re talking about a substantial pile of Treasuries generating substantial yield.
OUSD, the token at the center of the Open USD initiative, attacks that model from two angles simultaneously.
First, it plans to offer zero-fee minting and redemptions. Second, and this is the real kicker, OUSD intends to share reserve earnings with consortium participants after deducting a management fee. Circle keeps that yield for itself. OUSD wants to pass it around.
The consortium’s target is to launch OUSD later in 2026, giving Circle some runway to respond.
Why analysts think the sell-off was overdone
Not everyone panicked. Analysts from Clear Street and KeyBanc both characterized the stock’s initial plunge as potentially excessive, arguing that the stablecoin market is growing fast enough to support multiple major players.
USDC’s $73 billion market cap represents just one slice of a rapidly expanding pie. If the overall market doubles or triples in the coming years, Circle could lose relative market share while still growing in absolute terms.
The bigger picture for stablecoin economics
The revenue-sharing model is particularly significant. If OUSD distributes reserve yield to participants, it creates an economic incentive for every company in the consortium to prefer OUSD over USDC. Coinbase, notably, is both a Circle distribution partner and an OUSD consortium member, which creates an interesting tension. A company that currently helps drive USDC adoption now has a financial reason to promote a competing product.
For crypto investors watching this unfold, the key variable isn’t whether OUSD launches successfully. It’s whether OUSD’s model forces Circle to start sharing its own reserve income with partners and users. If that happens, Circle’s margins compress significantly even if it retains every single USDC holder. A company deriving 96% of revenue from interest income is extremely sensitive to any pressure on that income stream.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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