A consortium of more than 140 businesses — including Visa, Stripe, Mastercard, American Express, BlackRock, BNY, Google, Shopify and, pointedly, Coinbase — has launched Open USD (OUSD), a stablecoin built to share reserve earnings with its partners rather than concentrate them in a single issuer. Circle’s shares slid on the news. Jeremy Allaire, the company’s co-founder and chief executive, published a rebuttal on July 1, 2026 arguing that stablecoins “tend towards winner take most market structures”.
He may be right about the market structure and still be missing what OUSD is attacking. This is not a technology or liquidity fight. It is a fight over the float — and the firms leading it spent 60 years building shared-economics payment networks.
The reserve income is the product
A fiat-backed stablecoin makes money in one place: the yield on its reserve assets. Circle holds USDC reserves in cash and short-dated US Treasuries and keeps the income they generate, sharing a portion with distribution partners — of which Coinbase is by far the largest.
OUSD proposes no-cost minting and redemption, shared reserve earnings across the consortium, and an independent partner-led board. Strip the language away and it is an interchange model applied to a stablecoin: the participants who bring the volume claim a defined slice of the economics, and governance sits with the network rather than the issuer.
Visa and Mastercard are founding backers. Both understand how that structure behaves at scale, because both built one. The precedent for OUSD is not Tether or Dai — it is the bank-owned card associations of the 1970s, which existed so that no single participant could capture the rent.
Coinbase is on both sides of the table
The most awkward detail is that Coinbase — Circle’s principal USDC distribution partner, and a beneficiary of USDC reserve income — is listed among OUSD’s backers. Allaire addressed it directly.
“Our stablecoin partnership with Coinbase remains as strong as ever,” he said, adding that both firms “see that enormous opportunity ahead to expand the USDC network.” (CryptoSlate)
He also welcomed the newcomer: “We are huge believers in growth in the stablecoin ecosystem and welcome OUSD as a new member of the community!”
Read commercially rather than diplomatically, Coinbase’s position is rational: it is hedging a revenue line. If USDC keeps winning, its distribution agreement pays. If OUSD takes share, it sits on the board of the thing that took it. The only party with no hedge is Circle.
Circle’s numbers are genuinely strong
The defence rests on volume, and the volume is not in dispute. USDC processed close to $30 trillion in on-chain transactions in the first quarter of 2026, roughly 80% of all dollar-stablecoin blockchain transaction volume, according to Artemis data cited by Allaire. Circulation stands at about $77 billion.
Set that against Tether, which holds roughly $186 billion in market capitalisation and about 59% of stablecoin supply (DefiLlama). The synthesis nobody is stating plainly: Tether has 2.4 times Circle’s supply and a fraction of its velocity. They stopped being the same product some time ago. USDT is offshore dollar savings; USDC is a payment rail. OUSD is aimed squarely at the second business, not the first.
That distinction matters. A challenger cannot displace Tether’s balance without a savings proposition in emerging markets. It can displace Circle’s flows with better economics for the firms that route them — the wedge OUSD has chosen.
Regulation is the moat Circle actually has
Network effects are the argument Allaire is making publicly. Compliance is the stronger one he is under-selling.
USDC reserves sit in cash and short-dated Treasuries with monthly Deloitte attestations. Circle has secured US national trust bank approval — the first stablecoin issuer to do so. In a market where the Financial Crimes Enforcement Network’s stablecoin rules take effect on July 18, 2026 and the UK has just finalised a 1% capital charge for issuers, a consortium with 140 members and a partner-led board has to answer a question Circle answered years ago: who, precisely, is the regulated issuer, and which balance sheet absorbs a redemption run?
Shared economics are easy to design. Shared liability is not. Every participant in a partner-led structure has an incentive to take reserve income and an incentive to leave the capital requirement with someone else.
What to watch
Two things decide this. First, whether OUSD names a single regulated issuing entity or distributes issuance across members — the former makes it a serious competitor, the latter a governance experiment. Second, whether Coinbase routes meaningful volume to OUSD. Its distribution reach is the only asset in the consortium that can move USDC’s share near-term, and its behaviour, not its logo on a press release, is the signal.
The stablecoin market has spent two years being reshaped by regulators rather than competitors — from MiCA pushing 70% of Binance’s EU users into self-custody to the institutional plumbing built when Swift’s blockchain ledger went live with 17 banks. OUSD is the first credible attempt to reshape it by competition. Whether it survives contact with a capital requirement is another matter.
Karthik Subramanian
Karthik Subramanian is a founder, writer, and technology consultant with nine years in the crypto ecosystem. He covers token economics, L1/L2 infrastructure, DeFi protocols, wallets/custody, and the bridge between crypto and forex—broker technology, liquidity, and macro drivers. Karthik’s writing focuses on clear, practical frameworks that help professionals evaluate new products and on-chain innovation alongside FX market realities.
