Circle stock plunges as 140+ firms back rival stablecoin OUSD

Leo Sun, The Motley Fool Mon, July 6, 2026 at 9:46 AM PDT | 3 min read

• CRCL: -5.10%
• USDC-USD: -0.00%
• NVDA: +0.71%
• COIN: -3.17%
• V: -1.41%

On June 30, a coalition of more than 140 financial, tech, and retail giants — including Visa, Mastercard, Stripe, BlackRock, Coinbase (NASDAQ: COIN), Alphabet's Google, and Shopify — backed a new stablecoin called Open USD (OUSD).

Shares of Circle (NYSE: CRCL), the fintech company that mints the USD Coin (CRYPTO: USDC) stablecoin, immediately plummeted after the announcement. This article examines why Circle's stock dropped and whether the pullback represents a buying opportunity for patient investors.

Why Is OUSD an Existential Threat to USDC?

Circle backs the USD Coin with its own cash and U.S. Treasury holdings. Most of its revenue comes from the interest earned on those assets. OUSD aims to disrupt that business model by sharing that reserve income with its ecosystem partners that distribute and use its coins. As a result, companies now have a significant incentive to use OUSD instead of USDC.

Unlike USDC, which is managed solely by Circle, OUSD is managed by an independent board of partners. This decentralized governance democratizes control of the stablecoin, making it far more appealing to companies that do not want Circle making all the decisions.

OUSD also aims to provide zero-cost minting and redemptions with no volume limits. These features could undermine Circle's fee structures and reduce the operational friction that institutional investors often experience when moving capital across Circle's platform.

Finally, Coinbase's decision to sign on as a partner for OUSD is a notable red flag, as Coinbase was also a founding partner of USDC. Coinbase currently retains all interest income on USDC held on its platform and pays half of its residual reserve income to Circle. That crucial revenue-sharing partnership is set to expire on August 18. If Coinbase refuses to renew the deal and goes all-in on OUSD instead, Circle's stock could drop even further.

Is It the Right Time to Buy Circle's Stock?

OUSD is expected to launch by the end of 2026, and its pending arrival could generate unpredictable headwinds for Circle over the next few years.

From 2025 to 2028, analysts expect Circle's revenue to nearly double and its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to more than double. If those estimates prove accurate, the stock remains a bargain at three times next year's sales and 14 times its adjusted EBITDA. However, if OUSD's arrival forces analysts to hastily reduce their estimates, Circle could actually be overvalued relative to its growth potential.

It is still too early to assume that OUSD will pull companies away from USDC, but that existential threat makes Circle a lot less appealing. Investors should wait to see how Circle responds — and whether Coinbase renews its revenue-sharing agreement — before buying the stock.

Image source: Getty Images.