Circle (CRCL), stock price plunges 13% in 5 days... Will it collapse under OpenUSD's offensive?

▲ Circle (CRCL), USDC, Open USD, Stablecoin / AI-generated image

Circle is facing a test to defend its stablecoin leadership with the emergence of Open USD (OUSD). As major financial and payment companies such as Visa, Mastercard, American Express, BlackRock, and Coinbase throw their weight behind the new stablecoin, concerns are growing that USDC's market position could be shaken.

According to crypto media outlet Cryptopotato on July 2 (local time), observations about the impact on USDC spread in the market after the OpenUSD announcement. In the wake of this, Circle's stock price has fallen by approximately 12.7% over the past five trading days. The outlet reported that while existing operators still dominate most of the stablecoin market, industry experts diagnose that OpenUSD could significantly change the competitive landscape.

Alex Witt, General Partner at Verda Ventures, said in an interview with the media, "Distribution is king." He explained that value would accrue to operators with built-in distribution networks. Witt pointed out that unlike Tether, Circle does not directly own key distribution channels, citing Circle's structure of sharing 90% of its USDC reserve revenue with Hyperliquid as evidence of a weak competitive position. He assessed that OpenUSD could significantly undermine Circle's first-mover advantage.

Bernardo Brites, co-founder and CEO of Trace Finance, described OpenUSD as a "real structural break" in the stablecoin market. He explained that the market perceived the OpenUSD announcement as a direct threat to Circle. However, he added that challenges such as securing liquidity from scratch, a lack of trading pairs with major cryptocurrencies, governance friction arising from coordinating multiple stakeholders, and a thin fee structure are cited as execution risks.

Despite this, Brites viewed the OpenUSD consortium as larger than the USDG consortium issued by Paxos. He said, "It's unprecedented for major card networks, payment processors like Adyen, and banks like BNY and Cross River to stand behind a single stablecoin." He added that securing a distribution network has been the most difficult problem in the stablecoin market, and OpenUSD starts with a larger distribution base than any issuer.

Circle CEO Jeremy Allaire rebutted the optimism surrounding OpenUSD. Allaire stated that stablecoin networks are platform and network effect businesses, with most winners adopting a winner-take-all structure. He emphasized that building a network over many years is more important than a new consortium. He also pointed out that a model of sharing all profits depletes infrastructure, and that consortium products have a very poor track record in achieving scale, market fit, and product agility. Allaire predicted that the partnership with Coinbase remains strong and that many OpenUSD founding members would remain USDC partners and customers.

[Article Key Summary]

-OpenUSD has challenged USDC, backed by the support of major financial and payment companies such as Visa, Mastercard, American Express, BlackRock, and Coinbase.

-Experts praised OpenUSD's distribution network as a strength but identified securing liquidity, lack of trading pairs, governance friction, and fee structure as execution risks.

-Circle CEO Jeremy Allaire countered that long-standing network effects and the ability to maintain infrastructure are more important than a new consortium in the stablecoin market.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*