Circle CEO questions sustainability of free minting, cites USDC’s decade-long network advantage
Circle CEO Jeremy Allaire pushed back against Open USD’s proposed business model on Wednesday, arguing that USDC’s established network of integrations, liquidity, and regulatory infrastructure creates structural advantages that new stablecoin entrants cannot easily replicate.
Open Standard announced Open USD (OUSD) on Tuesday with backing from over 140 payments, banking, technology, and crypto companies, including Visa, Mastercard, Stripe, Coinbase, BlackRock, and Google. The stablecoin is expected to launch later in 2026. Allaire characterized stablecoin networks as platform businesses driven by network effects, and questioned whether OUSD’s proposed free minting and revenue-sharing model could sustain operations at scale.
Allaire framed the competitive dynamic in stark terms. “Starving an infrastructure,” he said, referring to OUSD’s approach to offsetting operational costs through mechanisms other than traditional fees.
Bernstein analysts identified OUSD as potentially “the strongest and first new entrant to challenge the duopoly of Circle and Tether,” signaling credible competitive threat. However, structural headwinds remain. Lorenzo Valente, director of research at ARK Invest, called the coalition a “giant letter of intent” but flagged a critical vulnerability: many OUSD backers operate competing infrastructure or support rival stablecoins.
Valente said that the partners are backing rivals. “Stripe owns Bridge and has its own stack, Coinbase is wedded to USDC, banks are building their own deposit tokens and the card networks support every token out there.”
Valente also noted that USDC and USDT have entrenched liquidity across the crypto ecosystem, creating a cold-start problem for any new entrant. The competitive pressure is real enough that Circle’s stock fell 17.55% on Tuesday, the day of OUSD’s announcement, closing at $62.63. The stock recovered 2.44% in premarket trading Wednesday, reaching $64.18 at 11 am UTC.
Bernstein flagged unresolved questions around OUSD’s governance, operations, and revenue-sharing formula. Open Standard has not disclosed specific details of how the stablecoin will be managed operationally or how costs will be covered once the network scales beyond its founding coalition.
Circle estimates it spends $500 million annually on marketing, infrastructure, technology, and compliance. Allaire’s implicit argument is that OUSD’s founders have not yet demonstrated how they will fund equivalent investment while maintaining the free-minting promise that distinguishes their model from USDC’s fee-based approach.
The announcement reflects intensifying competition in stablecoin markets as institutional demand for on-chain dollar infrastructure grows. OUSD’s 140-company backing suggests real appetite for alternatives to the Circle-Tether duopoly. Whether that coalition can overcome network effects, liquidity fragmentation, and internal conflicts of interest remains the central question as the stablecoin approaches its 2026 launch window.
