According to Jefferies, the recent return of Circe did not fully reflect the new competition risks. It noted that as banks, payment companies and financial science and technology enterprises continued to advance their own stable currency, the USDC environment had entered a more competitive phase.

Open USD brings new pressure

In their client reports, Jefferies indicated that they would not choose to “under-buy” Circe at current prices. At its core, it is judged that, at an early stage, Circle built up the USDC network by pre-emptive advantage, but new entrants now have the conditions that Circe did not have, that is, the mass distribution channels available.

The report mentions that Open USD is supported by more than 140 companies, including Stripe, Coinbase, Visa, Masters and Beled. The Alliance plans to share the benefits of reserves with participating companies, an arrangement that may increase its attractiveness to pay providers and financial science and technology platforms.

Coinbase's role was also named.

Jefferies also mentioned that Coinbase's participation in Open USD may expose Circle to new uncertainties. Citing the Agency ' s statement, the report states that about 95 per cent of the revenue of the Circle is derived from interest earned on USDC reserve assets, while at the same time relying heavily on Coinbase, a major distribution partner.

The existing commercial agreements between the two companies are reportedly due to expire in August, which also gives the market more attention to the change in the terms of subsequent cooperation between the two parties.

  • Circle, about $30 billion in stable currency, 25%.
  • USDC was launched in 2018
  • Circle, about 95% of the income comes from reserve interest.

Circle emphasizes web effects. Response

Faced with the claims of increased competition, the Chief Executive Officer of Circle Jeremy Allaire responded on platform X that the stabilization currency is essentially a network business that requires many years of work and is not an ordinary product that can be replicated in a short time.

He stated that USDC had established thousands of integrations, covering the exchange and the DeFi agreements, and had obtained regulatory clearances in European, Japanese and other markets. These infrastructure, mobility and compliance layouts are elements that are difficult to fill in the short term.

Allaire also questions the effectiveness of the implementation of the Alliance model. In his view, the conglomerates of large enterprises tended to provide inconsistent incentives, slow decision-making and was not conducive to sustained innovation.

Whether or not the alliance model runs is still to be seen.

Ark Invest’s Digital Asset Team member Lorenzo Valente also expressed doubts about Open USD’s expansion prospects. In his view, there were different claims of interest among over 140 participants, and coordination costs could be high.

Valente compares these models to DAO governance, and believes that the more participants, the more vulnerable the problem of slow decision-making. He also suggested that it remained to be seen whether large banks, payment networks and technology companies would continue to invest if the project were to come under regulatory pressure in the future.

In his view, Circe and Tether had spent many years putting in place a global compliance and licensing system, while the coalition-type projects were not necessarily consistent in the long run when the external environment changed.