Circle CEO Jeremy Allaire argued that USDC’s decade-old network of integration, liquidity and regulatory infrastructure gives it a structural advantage over recent entrants to the stablecoin market, while challenging key elements of the business model proposed by Open USD.
In Wednesday’s post X Allaire described stablecoin networks as business platforms driven by network effects, arguing that continued investments in integrations, liquidity, regulatory approvals, banking relationships and reserve management create competitive advantages that are tough to replicate.
He also questioned whether continuing to offer free, unlimited minting and redemption would be sustainable at scale and said returning almost all reserve income to partners risked “starving the infrastructure.”
The comments highlighted intensifying competition among stablecoin issuers as recent entrants seek to challenge USDC and USDT by offering companies a greater share of reserve revenues and influence over governance.
Open Standard announced Open USD (OUSD) on Tuesday with support from more than 140 companies in the payments, banking, technology and cryptocurrency industries, including Visa, Mastercard, Stripe, Coinbase, BlackRock and Google. The stablecoin is expected to launch later in 2026.
Circle stock performance over the last five days. Source: Yahoo Finance
Circle shares closed at $62.63 on Tuesday, down 17.55% from the previous session, before rising 2.44% to $64.18 in pre-market trading for the day at 11:00 a.m. UTC. According to to Yahoo Finance data.
OUSD may challenge Circle-Tether duopoly: Bernstein
In a research note, Bernstein analysts said OUSD could become “the strongest and first new entrant to challenge the Circle and Tether duopoly,” citing its reach in payments, banking, technology and trade.
Bernstein, however, said governance, operational architecture and revenue-sharing formula remain open issues because coordinating more than 140 partners will require significant work. Bernstein said Circle is spending close to $500 million on marketing, infrastructure, technology and compliance, underscoring the amount of resources needed to scale the stablecoin network.
Related: MetaMask launches a stablecoin income account with spending on the card
Lorenzo Valente, Research Director at ARK Invest, he took it a more skeptical look. In a post on X, Valente said that OUSD still faces a cool start problem created by the entrenched USDC and USDT liquidity throughout the cryptocurrency ecosystem. He called the announcement a “gigantic” letter of intent and said many participants also support competing stablecoins or operate their own infrastructure.
“Partners support rivals: Stripe owns Bridge and has its own stack, Coinbase is tied to USDC, banks create their own deposit tokens, and card networks support every token available,” Valente wrote.
