Circle Shares Tumble 15% After Visa, Mastercard, and Coinbase Back New USDC Competitor

Circle Internet Group (CRCL) saw its stock drop sharply on Tuesday following the announcement of Open USD (OUSD), a new dollar-pegged stablecoin launched by Open Standard and backed by a coalition of over 140 major companies. The consortium includes industry heavyweights such as Visa, Mastercard, and Coinbase — firms that have previously helped fuel the growth of Circle's own USD Coin (USDC).

The emergence of Open USD represents a direct challenge to Circle's dominant position in the enterprise stablecoin segment. Unlike traditional stablecoin models, Open USD allows businesses to mint and redeem tokens at no cost, while partners retain the majority of earnings generated from reserves after a nominal fee. This structure is a pointed threat to Circle's core business model: in 2024, reserve interest accounted for a staggering 99% of Circle's total revenue, according to the company's own regulatory filing.

Perhaps most damaging is the involvement of Coinbase. Circle paid Coinbase $908 million in 2024 alone to distribute USDC across its platform. Now, Coinbase has joined a competing consortium that redirects those reserve earnings back to its partners rather than to Circle.

Circle's stock fell nearly 15% on the news, hitting session lows and extending a broader pullback after an impressive rally earlier this year that saw shares climb from $50 to $129 over just six weeks.

The distribution angle poses the greatest long-term risk. USDC had been steadily gaining traction in corporate payment flows, even surpassing Tether in certain business transfer categories. However, Open USD's backers include the very payment networks that process the bulk of that enterprise volume.

Circle does retain meaningful advantages. USDC currently holds regulatory recognition in both the United States and Europe, and benefits from deep liquidity across major cryptocurrency exchanges — factors that won't disappear overnight.

Open Standard will govern Open USD through an independent board composed of its partner companies. The firm is currently led on an interim basis by Zach Abrams, who previously co-founded Bridge, the stablecoin infrastructure company acquired by Stripe for $1.1 billion in 2025. The list of backers spans a wide range of industries, including financial giants BlackRock and BNY, as well as technology firms Google and Shopify.

Stripe has gone a step further, embedding Open USD directly into its payments ecosystem. According to the official announcement, Will Gaybrick, Stripe's President of Technology and Business, confirmed that Open USD will serve as the default stablecoin for businesses operating on Stripe's platform.

Notably absent from the consortium are Circle itself, Tether, and PayPal. Tether's USDT continues to dominate the stablecoin market with approximately $185 billion in circulation, while USDC sits at around $74 billion.

Historical precedent offers a cautionary note. In 2019, Visa, Mastercard, and Stripe all initially supported Facebook's Libra stablecoin project, only to withdraw within months when regulatory opposition intensified. Whether Open USD can avoid a similar fate remains to be seen.

Open USD is scheduled to launch later this year on Plasma and other blockchains optimized for stablecoin transactions. The timing adds pressure on Circle: its revenue-sharing agreement with Coinbase for USDC distribution is set to come up for renewal in August, making the next several weeks critical for the company's financial outlook.