This week more than 140 of the world’s largest payments, banking, and technology firms launched Open USD, a jointly governed dollar stablecoin. The backers are the story: Visa, Mastercard, and Stripe; BlackRock, BNY, and Standard Chartered; Google, Coinbase, and Samsung. Two design choices set it apart. Minting and redemption are free, and the reserve yield flows to the partners rather than to a single issuer. It runs on Base, Ethereum, and Solana and is scheduled to launch later this year.
The interesting bit is the economics of issuance itself. Circle and Tether built their businesses on keeping the interest on their reserves, and Circle’s listing was underwritten by that float. Open USD’s backers are the distribution layer, the channels through which stablecoins reach users, and they propose to keep the reserve income they currently hand to an issuer for themselves. Circle’s founder however countered that stablecoins are winner-take-most network businesses, and today the numbers support him.
Past efforts suggest caution. Libra gathered marquee partners in 2019 and still failed to launch (granted, the regulatory environment at the time was not favourable) and many had signed loose commitments their boards never cleared. Centre, Circle’s original consortium, was built for many members and collapsed into a Circle and Coinbase pairing. History suggests these structures need one muscular actor at the centre to do the market development and absorb the risk, and with 140 parties and no obvious candidate the coordination problem is larger, not smaller.
Both sides of the argument could be right. USDC may hold its lead in liquidity and integrations while the economics of issuance compress, because the firms that own the customer now set the terms. It is a pattern we have seen across the sector: part of the value migrating from the layer that issues the asset to the layer that distributes it. The distributors have made their move, but a 140-member consortium is far easier to announce than to run.
This week’s market
- BGCI Index 6.75%
- Bitcoin 3.13%
- Ethereum 10.82%
- Solana 15.46%
All figures are week-to-date as of today 15:30 CET
News
- Standard Chartered Becomes First Global Bank to Offer Direct USDC Access to Institutions (learn more)
- Securitize Tokenizes Its Own NYSE Stock on Its First Day as a Public Company, Debuts Shares on Solana and Avalanche (learn more)
- Robinhood rolls out public blockchain as it expands deeper into crypto (learn more)
- New York Life Makes Tokenization Debut with Onchain High-Yield Bond Fund via Centrifuge (learn more)
- Open USD Launches: Visa, Stripe, Coinbase and BlackRock Back Rival Stablecoin Network (learn more)
- BNY and Circle Expand Partnership, Adding Mint and Burn Capabilities for USDC (learn more)
- FCA Finalizes Landmark Crypto Rules to Make UK a ‘Global Hub’ (learn more)
- Chainlink Launches Project Pangea With 50+ Banks Across 16 Countries for T+0 FX Settlement (learn more)
Relevant financial updates
- Ionic Digital, a Bitcoin mining and AI infrastructure company that operates power and data-center assets for mining, AI, and high-performance computing, has received a $400mln strategic investment from Oaktree Capital Management at a $2bln valuation
- Securitize*, a finance tokenization company, has raised $400mln in an IPO round with investments from BlackRock, Ark Invest, Cantor Fitzgerald, Cantor Equity Partners II, Morgan Stanley, Coinbase, and Circle
- Venice AI*, a private uncensored AI platform, has raised $65mln in a Series A round led by Dragonfly Capital with investments from Coinbase Ventures and North Island Ventures at a $1bln valuation
- Extended, a perp DEX offering cross-asset collateral, unified margin, perps, spot, and lending markets, has received a $12.5mln strategic investment from eToro
- THEA*, a predictive behavioral AI network for risk markets, has received an $8mln strategic investment from Maven 11, Spartan Group, Manifold Trading, Hack VC, and Fisher8 Capital
- Techdollar*, a private credit platform that lets founders, employees, investors, and family offices borrow against equity in private technology companies, has raised $3mln in a Pre-Seed round led by No Limit Holdings with investments from Reforge and Michael Egorov
- Adjacent*, a blockchain prediction markets platform, has raised $2.5mln in a Seed round led by Night Capital with investments from VanEck, UFO Holdings, Maven 11 Capital, and Digital Currency Group
*Underlying TBV portfolio position | Prices as per 03/07
Interesting things to read and listen to
- The Always-On Economy, from Pantera Managing Partner Cosmo Jiang (read here)
- 140 Companies Just Declared War on Circle, on the Chopping Block podcast (listen here)