Circle Internet's stock dropped roughly 5% Tuesday morning after news emerged that a consortium of payments companies, banks and asset managers is developing a new dollar-pegged stablecoin. The initiative - identified as Open Standard - will issue a US dollar-backed digital token named Open USD, according to a blog post shared with news outlets.
Participants listed as supporters of Open Standard include Visa Inc., Stripe Inc., Bank of New York Mellon Corp., BlackRock Inc., Klarna Group Plc, Chime Financial Inc., Alphabet Inc., and Coinbase Global Inc. The group reportedly comprises more than 100 financial firms in total. Company backers have said they intend to integrate the stablecoin into their platforms when it goes live later this year.
Zach Abrams, co-founder and CEO of Bridge - a stablecoin infrastructure company owned by Stripe - will serve as Open Standard's interim chief executive, the announcement indicated.
The arrangement adds a new player to a market currently dominated by a small number of issuers. Circle's USDC and Tether Holdings' USDT account for the bulk of stablecoin trading volume, while PayPal's PYUSD, which launched in 2023, is described as a distant third. Notably, Circle, Tether and PayPal are not participants in the newly formed Open Standard venture.
Several of the Open Standard partners already issue or use stablecoins in their operations. The release notes that Klarna introduced its own stablecoin in November, and that Mastercard acquired stablecoin infrastructure provider BVNK earlier this year.
Stablecoins have gained traction in the United States amid political support for clearer rules governing payment technologies. These digital currencies are typically pegged to another asset - often the US dollar - and are backed by reserves composed of short-term Treasuries and cash, the statement said.
The market reaction to the announcement was measurable in public equity prices: Circle shares moved lower following the report, and PayPal's stock displayed declines reflected in intraday pricing. The broader implications for market share among stablecoin issuers will depend on adoption and integration by the participating firms once Open USD launches.
Market context
- Open Standard aims to deploy a US dollar-backed stablecoin, Open USD, supported by a broad consortium of financial and technology firms.
- Backers intend to integrate the token into their systems when it becomes available later this year, with interim leadership named for the project.
- Existing leading stablecoin issuers - including Circle's USDC and Tether's USDT - are not part of this initiative, while PayPal's PYUSD remains a smaller participant in the market.