The new stablecoin follows a distinct strategy. Its goal is to draw in banks, payment processors, exchanges, and other distributors by waiving minting and redemption costs and passing nearly all reserve earnings to partners. Should that model work, the profit from stablecoins might move away from issuers toward distributors.
"This is squarely aimed at issuers like Circle who think they are going to keep all the revenue," remarked Austin Campbell, an adjunct professor at New York University's Stern School of Business. "I like the odds here more than most."
Circle's optimistic scenario holds that an expanding stablecoin market would benefit USDC even if its share declines. Yet if digital dollars become commoditized and interchangeable, the firms that link them to merchants, banks, and consumers might end up more valuable than the creators. However, success is not guaranteed.
Meta's Diem project failed amid regulatory and political opposition. Similarly, Global Dollar - backed by Robinhood and Kraken - has not reached meaningful scale despite high-profile supporters; it has enrolled over 100 members but its market value stands at only about $3 billion, compared with USDC's roughly $73 billion, per CoinGecko.
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Notably, Mastercard Inc. supports both Open USD and Global Dollar.
"The big challenge now becomes governance and independence and neutrality of this effort," said Christian Catalini, co-creator of Diem and founder of the MIT Cryptoeconomics Lab, who believes Open USD has a genuine chance. Some analysts view the situation differently. Devin Ryan and Noah Katz of Citizens referred to Open USD as "the most notable stablecoin announcement of the year" "and then argued it might help Circle more than hurt it, by growing the whole pie".
"Circle can concede some incremental share and still grow USDC's float and revenue base at a materially higher rate than it would have absent an industrywide push of this scale," they wrote. "The right question is not whether USDC's share of the stablecoin float ticks lower over time, but whether USDC continues to be one of the best stablecoin ecosystems on the dimensions that matter for institutional and agentic adoption - and we continue to believe the answer is yes."
Circle CEO Jeremy Allaire told Bloomberg that investors are underestimating the network effects USDC has developed over almost ten years. He pointed out that a vast array of products and services numbering in the tens of thousands are already integrated with USDC, and many of the firms supporting Open USD continue to be large USDC partners. (Coinbase, for instance, remains a critical Circle partner for USDC even though it also backs the new token.) Stablecoins are "platform network effects" businesses, Allaire said, contending that wider usage of digital dollars benefits the whole ecosystem.
On X, he elaborated further. He argued that newcomers have to surmount a network infrastructure that has been developed over close to ten years, covering liquidity, regulatory clearances, and integrations with thousands of apps and financial institutions. He referenced figures showing that USDC accounted for nearly 80% of all dollar-pegged stablecoin transfers on public blockchains during Q1, even though its share of total stablecoin supply is much smaller than Tether's.
Allaire also criticized the shared-revenue model. While passing most reserve earnings to distribution partners might draw users at first, he wrote, it could starve the long-term investment needed to maintain a global stablecoin network. He added that large consortia of companies rarely innovate quickly because their members have conflicting commercial interests.
Ultimately, the real challenge for Open USD will emerge after the initial excitement dies down: whether its backers will actually route transactions through it or merely keep it as an extra option in an already crowded stablecoin field.
"Its stated edge is economic alignment - sharing reserve economics with distribution partners - but its impact will depend on whether those partners route meaningful volume through it rather than simply adding another token to existing payment rails," said Stephen Tu, a vice president at Moody's Ratings within their financial institutions group.
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