Investment bank cites 140-firm consortium threat to USDC dominance
Jefferies investment bank on Wednesday advised against buying Circle stock following a 17% plunge the prior day, citing intensifying competitive pressure from Open USD, a stablecoin consortium backed by Stripe, Coinbase, Visa, Mastercard, and BlackRock.
“Buy the dip? We wouldn’t,” Jefferies analysts wrote. The bank flagged concerns that Open USD’s reserve income-sharing model and the backing of major payment and financial firms could erode Circle’s market position in the $300 billion stablecoin market, where the company currently holds approximately 25% share.
Circle derives roughly 95% of its revenue from interest earned on USDC reserves. The stablecoin, launched in 2018, has built a substantial lead through early mover advantage, thousands of ecosystem integrations, and regulatory approvals in Europe and Japan. Coinbase, which participates in the Open USD consortium, is Circle’s largest distribution partner.
Jefferies analysts stated that “CRCL headwinds are unlikely to ease,” signaling sustained pressure on the company’s valuation. The bank did not characterize Coinbase’s participation in Open USD as an abandonment of USDC support.
Circle CEO Jeremy Allaire disputed the competitive threat, emphasizing USDC’s network effects and existing regulatory footprint. He also challenged the notion that Open USD’s income-sharing structure represents a meaningful differentiator, noting that Circle already shares the majority of its revenue with distribution partners.
“Giving away all the income is a recipe for starving an infrastructure,” Allaire said, questioning whether reserve sharing alone could sustain a competing stablecoin.
The Open USD consortium comprises 140 backing firms. Allaire expressed broader skepticism about consortium-style stablecoin initiatives, arguing that large groups of competing companies struggle to coordinate effectively.
“Large groups of large companies coordinate poorly, have misaligned incentives, slow things down and rarely create the space for real durable innovation,” Allaire said.
Lorenzo Valente, director of digital asset research at ARK Invest, echoed this concern. “A consortium of hundreds of rivals has no precedent for working,” Valente said. He pointed to prior failed attempts, including Meta’s Diem project and the Paxos-led Global Dollar Network, as evidence that consortium models struggle to achieve market traction.
Valente highlighted a structural weakness in consortium governance: “‘Owned by everyone’ almost always means accountable to no one.” He expressed confidence in operators capable of independent execution over those requiring committee approval. “I’d bet on the two operators who can ship unilaterally over a committee that has to ask hundreds of rivals for permission,” Valente said.
Circle shares bounced 5% on Wednesday after the prior day’s decline. A commercial agreement between Circle and Coinbase is reportedly up for renewal in August 2026, adding another potential pressure point for the company’s business model.
Both Allaire and industry analysts acknowledge that consortium-backed stablecoin initiatives resurface regularly. “Every year we get our consortium-style initiative around a stablecoin,” Valente noted, suggesting that while Open USD poses a near-term competitive risk, its long-term viability remains uncertain.
