Why OpenUSD's 'real threat' that tanked Circle stock still faces a steep uphill battle for adoption

Circle shares (CRCL) cratered on Tuesday after the new Open USD stablecoin network rattled investors, but analysts say it's too early to conclude the consortium poses a serious threat to USDC.

The Open Standard, backed by more than 140 companies including Stripe, Coinbase, Visa, Mastercard and BlackRock, immediately attracted attention because it attacks one of Circle's key advantages: its network of institutional partners. Some went as far as to call it an "existential threat" to Circle, whose business model relies primarily on retaining the interest earned on the assets backing USDC. OUSD, by contrast, would distribute that yield to partners rather than keep it for the issuer.

"The marquee partner names clearly suggest a real threat to Circle's business," Rob Hadick, general partner at venture capital firm Dragonfly, told CoinDesk. He added that Stripe's broad suite of financial products could give the consortium an edge by allowing it to "uniquely undercut Circle's economics."

Others are more cautious in their take, at least for now.

"It has a strong line-up on paper, which will impact the near-term sentiment of CRCL until OUSD is launched later this year," Clear Street managing director Owen Lau said.

Still, he argued that the Circle's 16% selloff on Tuesday went too far.

"I think it is an overreaction," he told CoinDesk.

He pointed to Paxos' Global Dollar Network (USDG), another consortium-backed stablecoin that shares reserve income with partners but has yet to gain significant market share. It has grown to a $3 billion supply since its launch in late 2024, lagging far behind USDC's $73 billion and USDT's $145 billion, according to CoinDesk data.

"The bigger question is how OUSD can convince consumers and end users to adopt them," Lau said. "We don't really know the answer until it is fully launched so that we can gauge the market cap and usage."

Hadick also cautioned that building an industry consortium is rarely straightforward.

"Consortiums are hard and they break easily," he said. "Incentives are broad and often misaligned."

"So while the [Circle] stock selloff seems clearly reasonable, I also don't expect this to be an easy or straightforward road for Open Standard and expect it to be harder to get to scale than expected," Hadick added.