Circle stock slides as BlackRock-backed Open USD shakes up stablecoin economics
Circle Internet Group’s share price sank sharply after a powerful new competitor entered the stablecoin arena with a radically different revenue model that threatens one of Circle’s key profit engines.
On Tuesday, Circle closed at 62.65 dollars, down 17.52% from the prior session, according to market data. The stock had opened the day at 72.25 dollars, then steadily declined, briefly touching 62.52 dollars before finding support near its intraday low. The selloff came as investors digested the debut of Open USD (OUSD), a new revenue-sharing stablecoin seen as a direct challenge to Circle’s USDC.
Trading activity surged alongside the price drop. More than 34.5 million Circle shares changed hands, more than double the company’s average daily volume of roughly 14 million. The spike in volume underscored how closely investors are tracking competitive threats in the rapidly evolving stablecoin market.
The immediate catalyst was the launch of Open USD, developed by Open Standard, an industry initiative led by Bridge co-founder Zach Abrams. The project is backed by an unusually heavyweight consortium of more than 140 organizations across finance and technology – including BlackRock, Google, Visa, Coinbase and other major firms aiming to build shared infrastructure for dollar-pegged digital assets.
What differentiates Open USD is not the promise of dollar stability itself, but how the economics are distributed. Unlike the traditional model used by issuers such as Circle, Open USD is designed with fee-free minting and redemption. Instead of centralizing reserve earnings in a single company, the new framework channels most of the income generated from reserves back to participants in the broader ecosystem.
Governance is another major break from the issuer-centric approach. Rather than placing control in the hands of a single corporate issuer, Open USD will be overseen by an independent, partner-led organization. In theory, this structure gives institutional participants more say in how the network evolves, while aligning incentives among those building on top of the stablecoin.
This model poses a direct challenge to Circle’s economics. For years, reserve interest income has been one of the primary sources of revenue for stablecoin issuers, particularly in environments with higher interest rates. By opening that revenue stream to banks, fintechs, payment processors and other ecosystem partners, Open USD undercuts the idea that only the issuer should capture the value generated by the reserves behind the token.
Open USD’s design echoes elements of Paxos’ Global Dollar Network, which also shares reserve revenue with partners. Together, these initiatives signal a broader shift in stablecoin strategy: instead of just competing on liquidity and brand, issuers are now experimenting with incentive structures that make their tokens more attractive to large institutional players who expect a share of the upside.
The timing is significant. Stablecoins are rapidly moving beyond their original role as a tool for crypto traders. Dollar-pegged tokens are increasingly used for cross-border transactions, merchant settlement, and as part of corporate treasury strategies seeking faster, cheaper, always-on alternatives to legacy banking rails. As this market matures, the fight is no longer just about market share on trading platforms; it’s about who will dominate payments, remittances, B2B settlement and financial infrastructure.
This expansion has drawn in traditional financial institutions, payment giants and major technology companies, all of whom see stablecoins as a way to modernize payments and unlock new revenue streams. The emergence of Open USD, backed by some of the most influential names in global finance, underscores how aggressively incumbents are now moving into this space.
Despite the sharp reaction in Circle’s share price, the company’s leadership insists that Open USD does not fundamentally alter its growth trajectory. Circle CEO Jeremy Allaire publicly rejected the idea that the new stablecoin represents an existential threat to USDC, arguing that the addressable market remains large enough to support multiple global issuers.
Allaire emphasized that Circle’s strategy is to deepen USDC’s presence within the institutional ecosystem, not to chase every short-term competitive move. According to him, the company plans to continue onboarding banks, payment providers and capital markets players, while investing in infrastructure that makes USDC more interoperable across an expanding list of blockchain networks.
In his comments, Allaire described USDC as “the most trusted, widely adopted, institutional-ready stablecoin in the world,” noting that thousands of institutions across almost every major sector already participate in the USDC ecosystem. This installed base, he implied, gives Circle a structural advantage even as new competitors experiment with alternative economic models.
Circle also intends to keep broadening USDC’s reach beyond its existing blockchain footprint. The company is working to integrate its stablecoin more deeply into traditional financial rails, embedding USDC within banking systems, payment processors, capital markets platforms, and enterprise software. Part of that roadmap includes expanding the ways in which partners can benefit economically from USDC’s growth – a clear nod to the rising appeal of revenue-sharing structures like those introduced by Open USD.
Still, Tuesday’s market reaction highlights a key concern for investors: even if Circle’s long-term vision remains intact, the entrance of a heavily funded, consortium-backed rival could compress margins and slow the pace at which USDC captures new institutional relationships. The success of Open USD, or projects like it, may force established issuers to rethink how much of the reserve yield they retain versus how much they share to stay competitive.
The broader implication is that the stablecoin business model itself is in flux. In the early days, simply providing a trusted, fully-backed digital dollar was enough to justify issuer-centric economics. Today, as stablecoins embed deeper into global payment flows and financial infrastructure, institutions are pushing for greater participation in the value created by these networks. Those that offer aligned incentives – such as shared reserve income, governance rights, or integrated yield opportunities – may find it easier to win over banks and large enterprises.
From a regulatory perspective, the rise of revenue-sharing stablecoins backed by influential financial and technology players will likely draw more attention from policymakers. As these networks start to carry meaningful payment volume and interact more directly with traditional finance, questions around transparency, consumer protection, systemic risk and the treatment of reserve income will move to the forefront. Investors are already anticipating that regulatory developments could favor some models over others, adding another layer of uncertainty to the competitive landscape.
For Circle, the challenge now is to balance stability with adaptation. The company must reassure existing partners and customers that USDC remains a safe, compliant, institution-grade asset, while at the same time responding to the market’s growing interest in more collaborative revenue structures. That might mean introducing new incentive programs, creating co-owned infrastructure with banks and payment firms, or selectively adjusting how reserve income is shared.
Institutional clients will compare not only the brand reputation and liquidity of different stablecoins, but also the tangible economic benefits of integrating each token into their systems. In a world where multiple well-capitalized issuers offer comparable levels of security and compliance, the distribution of revenue and governance rights could become the key differentiator.
The launch of Open USD also underscores how alliances are reshaping the sector. With names like BlackRock, Google, Visa and Coinbase backing a shared infrastructure approach, consortium-driven models are emerging as a serious counterweight to single-issuer systems. Such alliances can pool resources, distribute risk, and align diverse stakeholders around a common digital dollar standard, which may appeal to institutions wary of depending on any single private company for core payment infrastructure.
At the same time, fragmentation is a real risk. As more stablecoins compete with distinct rulebooks, chains, and economic designs, interoperability and liquidity splintering become serious concerns for users and institutions. This is where Circle sees an opportunity: by focusing heavily on interoperability and multi-chain support, it aims to position USDC as a universal layer that can bridge disparate networks and frameworks.
Over the coming years, the stablecoin market is likely to evolve into a multi-polar system with several dominant tokens, each optimized for slightly different use cases and partner expectations. Some will prioritize maximum regulatory conservatism and simplicity of economics. Others, like Open USD, will push revenue-sharing and collaborative governance to the forefront. Circle’s task is to ensure that USDC remains indispensable across these different regimes, even as its rivals attempt to redefine what “fair” stablecoin economics look like.
For now, the sharp drop in Circle’s share price reflects investor anxiety rather than a definitive verdict on its long-term prospects. The company still commands a massive share of the regulated stablecoin market, with deep integrations across exchanges, fintechs and institutional platforms. Yet the emergence of Open USD marks a turning point: competition is no longer just about who can issue the most trusted digital dollar, but about who can build the most compelling economic and governance ecosystem around it.
As stablecoins move from niche crypto tools to core components of global financial plumbing, that ecosystem – not just the token – may ultimately decide which players emerge as the lasting winners.