A new stablecoin called Open USD, backed by over 140 traditional finance and Web3 giants including BlackRock, Coinbase, Mastercard, Stripe and Visa, is set to launch in the second half of 2026 and poses the most serious threat yet to Circle's USDC business model, according to a CoinShares report published on July 15, 2026. The report warns that Open USD's shared reserve yield model could erode Circle's competitive advantage by distributing interest income to ecosystem partners rather than keeping it all for itself. The warning has already triggered market reactions, with Mizuho Securities cutting Circle's price target from $85 to $50.
The disruptive business model
CoinShares analyst Luke Nolan highlighted that Open USD's key weapon is its different business model. Traditional stablecoin issuers like Circle keep all the interest income generated from reserve assets, mainly U.S. Treasuries. Open USD, however, plans to charge only a small management fee and distribute the remaining yield to participating companies in its ecosystem. This approach directly undermines Circle's economic incentive for maintaining USDC issuance and distribution. Nolan noted that if this shared-governance model works, it will greatly increase enterprise adoption of Open USD and push stablecoins deeper into mainstream payments. The timing is particularly critical because Coinbase currently receives about half of USDC's reserve income, and the revenue-sharing agreement between Circle and Coinbase is up for renewal on August 18, 2026. Open USD could force Circle to bear higher ecosystem maintenance costs.
USDC circulation drops, Mizuho cuts target
USDC is already showing signs of weakness. Its circulating supply has fallen from nearly $80 billion in March 2026 to about $73 billion now, with market share shrinking. Mizuho Securities cited the threat from Open USD's business model as the reason for downgrading Circle's stock from "neutral" to "underperform" and slashing the price target from $85 to $50. Market sentiment reflected the concern: on the day Open USD was announced, Circle's stock fell more than 17%, though CoinShares attributed some of that to technical selling from the Russell index rebalancing. In early trading on the day of the report's release, Circle shares rebounded 3.8% to $65.61.
First-mover advantage remains
Despite the threat, CoinShares offered a balanced view, noting that Open USD has not yet launched and many details about its reserve structure and fees remain unclear. USDC has deep liquidity and integration in crypto exchanges, DeFi and payment systems built up over years, which newcomers cannot easily replicate in the short term. The report also said Open USD poses less of a threat to Tether's USDT, whose moat lies in emerging-market adoption and offshore dollar liquidity. Investors should watch whether Circle changes its distribution strategy to fight back, and whether Open USD can turn its high-profile endorsements into real on-chain adoption.