Circle CEO Jeremy Allaire pushed back on Open USD’s attempt to challenge USDC after the new stablecoin project drew support from major payment, banking, technology and crypto firms this week.
In a Wednesday post on X, Allaire said stablecoin networks grow through long-built integrations, deep liquidity and regulatory reach. He argued that those layers give USDC a strong position as OUSD prepares to enter a market still led by USDT and USDC.
USDC network becomes Circle’s main defense
Allaire described stablecoin networks as platform businesses that gain strength as more apps, exchanges, wallets and payment services connect to them. He stated that each new integration adds more utility and makes the network more attractive to other builders and users.
Circle has spent nearly a decade building USDC across crypto platforms, payment firms and financial partners, according to Allaire. He noted that the company has also added tools such as CCTP and Gateway to support safer transfers, interoperability and easier access to liquidity across chains.
Liquidity sits at the center of Allaire’s argument. He said stablecoins need strong primary access through banking channels and strong secondary trading access across markets.
Allaire said BTC, USDT and USDC remain among the most liquid digital assets, while smaller dollar stablecoins remain far behind. He also stated that USDC liquidity is spread across many exchanges, DeFi venues, payment firms and regional platforms.
OUSD brings big partners and a new model
Open Standard announced OUSD with support from more than 140 companies, including Visa, Mastercard, Stripe, Coinbase, BlackRock and Google, as reported yesterday. OUSD is pegged to the U.S. dollar and is expected to launch natively on Solana.
In addition, the project plans to let businesses mint and redeem OUSD without fees or volume limits. Open Standard has also proposed an “Earn by Default” model, where partners receive portions of revenue from the token’s U.S. dollar reserves after a management fee.
Open Standard aims to address cost, scale and access issues that businesses face when using stablecoins. The venture would issue Open USD later in 2026 and share reserve earnings with partners after operating costs.
That model targets a core part of the current stablecoin business. Issuers often earn income from reserves that back their tokens, including cash and short-dated U.S. Treasuries.
Allaire questions free redemptions and consortium control
Allaire questioned whether unlimited free minting and redemption can remain practical at scale. He said stablecoins with strong redemption channels can become the offramp for rival tokens that charge large redemption fees or limit direct access.
He remarked that Circle handles these cases through contracts rather than a broad fee exemption. The comment addressed one of OUSD’s main selling points without saying that free redemption is impossible.
Moreover, Allaire also raised doubts about revenue sharing. He noted that Circle already shares a large part of its income with distribution partners, but still keeps enough revenue to fund infrastructure, regulation, liquidity and software. He warned that giving away nearly all income could mean “starving an infrastructure.”
He also questioned the consortium model behind OUSD. Large groups of large companies often move slowly, face mixed incentives and struggle to build products with speed.
Stablecoin rivalry grows as market expands
The debate comes as stablecoins take a larger role in crypto markets and payments. Previously, we reported last week that USDT became the second-largest crypto by reported market cap as ETH fell to a 2026 low, while stablecoins represented about 15 percent of the total crypto market.
USDC is among the top 5 cryptocurrencies by market cap. Meanwhile, USDS, USD1 and DAI, showing that the sector has several players but remains concentrated near the top.
Bernstein analysts said OUSD could become the strongest new entrant to challenge the Circle-Tether duopoly. The analysts also said governance, operations and revenue sharing remain open questions because coordinating more than 140 partners requires major work.
Lorenzo Valente, director of research at ARK Invest, also pointed to OUSD’s cold-start problem. He said many announced partners also back rival stablecoins or operate their own systems, including Stripe, Coinbase, banks and card networks.
Circle keeps Coinbase partnership in focus
Allaire also addressed questions around Circle’s partnership with Coinbase. He said the relationship remains strong and that both companies see room to expand the USDC network.
That point matters because Coinbase also appears among OUSD’s supporting companies. Allaire said Circle expects some OUSD founding members to remain large USDC partners and customers, even if those firms support or test competing products.
Circle is also expanding beyond USDC through Arc, CCTP, CPN, StableFX and other tools. Allaire said the company continues to work with other stablecoin issuers by helping them launch on Arc, use interoperability tools, gain wallet support and access settlement or foreign exchange options.
The comments show that Circle plans to defend USDC through liquidity, regulation, software and partnerships, rather than only through reserve income. OUSD now has major names behind it, but its test will be whether those partners turn the announcement into active usage.
