When a formidable rival emerges, CRCL plummets over 17%

Original Article: Odaily Planet Daily (@OdailyChina)

Author: Azuma (@azuma_eth)

The stablecoin赛道 has welcomed a truly heavyweight new player.

On the evening of June 30, Beijing time, a new company called Open Standard announced the launch of a new US dollar stablecoin, Open USD, which is set to officially go live later this year.

Who is Open Standard? Unheard of before today. The key information lies in the fact that alongside Open USD, a partnership list encompassing 140 enterprises was also unveiled — including Visa, Mastercard, Stripe, and Adyen in the payments sector; financial institutions like BlackRock, BNY, DBS, Standard Chartered, and Mizuho; tech giants such as Google, Shopify, and IBM; and leading crypto industry players like Coinbase, OKX, Bybit, Ripple, Fireblocks, and MetaMask, covering payments, banking, the internet, and digital assets.

Open Standard stated that Open USD aims to be a stablecoin designed for "global capital flows," offering businesses a lower-cost, more open on-chain dollar infrastructure.

Following the announcement, capital markets reacted swiftly. Shares of Circle (CRCL) plummeted 17.55% in a single day, marking one of its largest declines in recent times. The market widely believes that the launch of Open USD signifies that the stablecoin industry has finally welcomed a truly competitive new challenger.

What Makes Open USD Different?

At first glance, Open USD might not seem vastly different from USDC or USDT. It is also a stablecoin pegged to the US dollar and follows an over-collateralization model. However, in terms of issuance and operational mechanisms, Open USD incorporates several distinct design choices that seemingly target Circle's model...

First, zero-cost minting and redemption.

Open Standard stated that enterprise users can mint and redeem the stablecoin without limits or fees, imposing no additional scale restrictions. For payment institutions and financial firms that need to process large capital flows, this means lower capital usage costs and a reduced barrier to entry for adopting stablecoins as a payment infrastructure.

Second, and most critically — the income generated from reserve assets will belong to the partners.

This is the biggest difference between Open USD and existing mainstream stablecoins. Currently, most stablecoins, including USDC, allocate user-deposited dollars into low-risk assets like US Treasuries, with the resulting interest income mainly accruing to the issuer. This is one of Circle's most important revenue streams.

Open USD, however, adopts a completely different model. The company stated that the income generated from stablecoin reserves will be returned to partners by default, with Open Standard only charging a small management fee to cover operational costs. In other words, the reserve income, previously largely exclusive to the issuer, will be redistributed among all ecosystem participants.

Finally, a change in the governance model.

Open USD is not operated by a single entity. Instead, it is managed by Open Standard, with a board of directors composed of partners who participate in future development direction and major decisions.

The company refers to this model as "Neutral Governance," aiming to make Open USD an open industry infrastructure rather than a product belonging to any one company.

Circle Faces a True Rival

In the past few years, many stablecoins have attempted to challenge USDC, but most have struggled to truly shake Circle's market position. The reason is simple: the largest moat for stablecoins has never been technology, but rather trust, compliance, and adoption.

On the compliance front, Circle has long actively embraced regulation, making it one of the most compliant stablecoin issuers within the US regulatory framework. Regarding adoption, USDC is widely integrated by Coinbase, Visa, Stripe, Robinhood, and numerous exchanges, wallets, and payment processors, creating a significant network effect. For a latecomer, simply issuing a new stablecoin is not difficult; the real challenge is getting the entire industry willing to use it.

But the situation for Open USD is different. Unlike previous stablecoins relying on a single company and requiring adoption from scratch, Open USD boasts a prestigious list of partners covering payments, banking, the internet, and the crypto industry from its inception. Companies like Visa, Mastercard, Stripe, BlackRock, Coinbase, Google, and Shopify are themselves among the most important potential users and promoters of stablecoins.

More importantly, many of these companies were already significant participants in the USDC ecosystem. For instance, Coinbase has maintained a deep partnership with Circle, jointly driving the growth of USDC; payment giants like Stripe and Visa were also key drivers in the recent implementation of stablecoin payments.

Now, with these enterprises collectively joining Open Standard, it undoubtedly means that Open USD starts from a position far superior to typical new projects in terms of compliance, distribution channels, and adoption rates. For Circle, this might be the real challenge.

One of USDC's greatest past advantages was being the default choice for institutions entering the on-chain dollar system. However, when a group of heavyweight players collectively decides to create a new standard, the market will begin to reassess one question: If a company can achieve similar compliance capabilities, similar network coverage, and also share in the income generated from stablecoin reserves, why would it continue to help Circle build the USDC network?

CRCL Plunges Over 17%, Is It Still Worth Holding?

Following the Open USD announcement, Circle (CRCL) shares plummeted over 17% overnight — besides the competitive pressure from Open USD, CRCL's removal from Russell indices was another key bearish factor.

FTSE Russell removed Circle (CRCL) from five major Russell Growth Index benchmarks in its latest annual index reconstitution. This is a direct blow to institutional holdings.

Considering that Open USD won't be released until later this year, USDC's market share is unlikely to face a sharp short-term impact. However, the market's real concern is whether USDC's moat, built on its first-mover advantage, compliance framework, and liquidity network, remains solid?

The emergence of Open USD has led the market to reassess Circle's business model — When companies can jointly issue stablecoins and share reserve income, can Circle continue to exclusively enjoy the dividends of stablecoin growth?

There may be no answers to these questions yet, but the sharp decline in CRCL indicates that the capital market is beginning to reprice this possibility.

As a CRCL holder, I will not reduce my position during this moment of rampant FUD sentiment, but I will definitely reassess my expectations for this trade once CRCL stabilizes.