Jefferies warns against buying the dip in Circle as Open USD raises new competition fears
CoinDesk 2026-07-01 16:11:50
Context: Circle, the issuer of the USDC stablecoin, faces mounting competitive pressure from new entrants in the stablecoin market, including the recently launched Open USD consortium backed by Stripe, Coinbase, Visa, Mastercard, and BlackRock. The investment bank Jefferies has warned against buying the dip in Circle, citing concerns that the new competition could pressure USDC's growth and market share. Circle CEO Jeremy Allaire and ARK Invest's Lorenzo Valente have pushed back against the competitive narrative, arguing that USDC's existing network effects and regulatory footprint give it an edge over new rivals.
Key Facts
- Circle holds roughly 25% of the $300 billion stablecoin market and derives about 95% of its revenue from interest earned on USDC reserves, with Coinbase being its largest distribution partner.
- The Open USD consortium, backed by more than 140 companies, aims to share reserve income with participating companies, potentially making it an attractive alternative for payment providers and fintechs.
- Jefferies analysts have flagged Coinbase's participation in Open USD as a new risk, as it could eventually promote competing stablecoins and weigh on USDC's growth, with the companies' commercial agreement up for renewal in August.
- Circle CEO Jeremy Allaire has argued that stablecoins are ultimately network businesses built over years, rather than products that can be replicated overnight, and that USDC's ecosystem of thousands of integrations and regulatory approvals give it an edge over newcomers.
- ARK Invest's Lorenzo Valente has expressed skepticism about the consortium model, noting that large groups of companies often struggle to coordinate effectively and that the pace of decision-making across competitors is likely to be slow.