Circle’s Stock Tanked 19% on OUSD’s Announcement. How Justified Was the Reaction?

OUSD’s announcement sent Circle’s stock into a free fall. But how much of a threat does the new stablecoin actually pose?

The stablecoin world has a new entrant and its announcement has had at least some Circle investors shaking in their britches.

Circle’s stock fell nearly 19% last week as Open Standard, a new company helmed by Zach Abrams, the CEO of another stablecoin company called Bridge, announced plans to launch Open USD, or OUSD, a stablecoin backed by nearly every finance giant you can think of, from BlackRock to Western Union. 

It didn’t help that a report of Circle being delisted from several Russell growth indexes broke the day before. While Circle has pared some of last week’s losses, it is still trading below its price before the OUSD announcement at $66.65.

The market reacted poorly for a number of reasons. Open Standard’s partnerships suggest it is targeting the same market as Circle: compliant Western enterprise payments. But Open Standard, which will launch later this year and is helmed by Stripe-owned stablecoin company Bridge CEO Zach Abrams, isn’t just going after Circle’s target market; Open Standard is also trying to undercut Circle while at it 

Unlike Circle, Open Standard says it won’t charge fees on redemption and minting. In comparison, Circle charges up to 0.05% on redemptions depending on volume. Open Standard also promises to give the revenue earned on reserves to partners, less a management fee.

So is OUSD “an existential threat” to Circle, as Coin Bureau founder Nic Puckrin put it?

In the rest of this issue, subscribers get:

• • A critical look at how OUSD challenges the two main drivers of Circle’s business
  • Coinbase’s role in any emerging competition
  • Whether the consortium model just might work this time
  • The bull, base and bear cases for Circle
  • What investors should be watching for the clearest near-term indication of what is to come for Circle’s business. 

Already a subscriber? Keep reading.