Open USD is coming aggressively! Circle (CRCL.US) received support from William Blair after a sharp drop: the market's reaction to competitive risks is excessive.

After Open Standard announced the launch of a competitive stablecoin called Open USD, the stock price of stablecoin issuer Circle (CRCL.US) plummeted over 17% on Tuesday. In response to this, William Blair analyst Andrew W. Jeffrey believes that the market's concerns about competitive risks are exaggerated. In a report to clients, he wrote, "We believe that competition is inevitable in the stablecoin market, which exceeds $20 trillion in scale, and this actually proves the commercial viability of stablecoin business models and will benefit Circle and its USDC." Jeffrey reiterated his "outperform the market" rating for Circle, citing reasons such as its first-mover advantage, stronger liquidity, and its stablecoin circulation infrastructure CPN (Circle Payments Network). Additionally, with a market value of around $73 billion, USDC is nearly 15 times larger than its closest competitor that meets the requirements of the GENIUS Act. He wrote, "We believe that new entrants will have difficulty replicating Circle's business model, and the advantages they claim, such as reserve income-sharing, are actually not fundamentally different from existing models." "In our view, Open USD seems more like a solution launched to find problems." Reportedly, Visa (V.US), Stripe, and over 100 Financial Institutions, Inc. are jointly launching a new stablecoin initiative, which could intensify competition in the stablecoin market. The new project called Open Standard plans to issue a stablecoin called Open USD pegged to the U.S. dollar. According to public information, institutions participating in this alliance include Visa, Stripe, New York TrustCo Bank Corp NY (BK.US), BlackRock, Inc. (BLK.US), Klarna, Chime, Alphabet Inc. Class C (GOOGL.US), and Coinbase (COIN.US), among others. The alliance stated that Open USD is expected to officially launch later this year, at which point all partners plan to integrate the stablecoin into their respective payment and financial service systems. Additionally, Zach Abrams, co-founder and CEO of Bridge, a stablecoin infrastructure company under Stripe, will serve as the interim CEO of Open Standard, overseeing the initial operations of the project. Some key design principles of Open USD include supporting zero-cost minting and redemption, allowing enterprises to mint and redeem OUSD for free with no scale limit. This contrasts sharply with the minting/redeeming fees charged by Circle USDC and Tether USDT, forming a stark contrast with the model where issuers grab most of the profits. Analysts at MacGregor believe that this could put pressure on the business models of Circle's USDC and Tether, while also potentially marginalizing the market position of PayPal's PYUSD. Furthermore, Open USD will also return reserve asset income to ecosystem participants. Almost all interest generated from the underlying U.S. Treasury bond reserves will be returned to participating businesses after deducting a small management fee. In the existing model, the issuer (such as Circle) retains the vast majority of reserve interest income - according to Circle's filings, this source accounted for 99% of its 2024 revenue. Open USD also adopts collective governance, jointly governed by partners rather than controlled by a single company. Some analysts believe that the establishment of Open Standard signifies a further escalation of competition in the stablecoin industry. Currently, Circle's USDC and Tether's USDT dominate the global stablecoin market, while PayPal's PYUSD, launched in 2023, lags far behind the former two. It is worth noting that the three stablecoin issuers did not participate in this alliance. In fact, many members who joined Open Standard have already ventured into the stablecoin business themselves. For example, Klarna launched its own stablecoin last November, and Mastercard (MA.US) acquired the stablecoin infrastructure startup BVNK earlier this year to strengthen its digital payment layout. Market observers believe that unlike traditional stablecoins issued by a single institution, Open Standard is more like an industry standard driven by large payment institutions, Financial Institutions, Inc., and tech companies, with its greatest advantage being a wide range of payment networks and application scenarios. If future partners such as Visa and Stripe fully integrate with Open USD, it is likely to rapidly expand its scope of payment and settlement use, challenging the existing stablecoin market landscape.