Open USD Targets Stablecoin Leaders on Separate Fronts

Open USD (OUSD), backed by more than 140 companies including Visa, Mastercard and Coinbase, may pose little immediate threat to Tether's $184bn USDT stablecoin. But it could make it considerably harder for its new USAT stablecoin to establish itself in the market Tether created it to capture. 

The distinction illustrates how Open Standard's consortium model may disrupt the $310bn stablecoin market. Rather than challenging the incumbents - Tether and Circle's USDC - by the same methods, OUSD is targeting Circle's core business model while threatening Tether's ability to expand not just in the US, but to capitalize on the growing wave of institutional payment flows. Eventually, those two fronts may converge.

Two products, two markets 

USDT is the world's largest stablecoin, accounting for about 59% of the market share, and serves as the dominant dollar rail for crypto trading and cross-border transfers, particularly in emerging markets.

Tether's scale and international footprint have increasingly contrasted with regulatory developments in Europe and the US.

The company opted not to make USDT compliant with the European Union's Markets in Crypto-Assets (MiCA) framework, prompting many exchanges to delist the token over the past few months. In the US, Tether and other issuers have a three-year transition period under the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act to comply with reserve and disclosure requirements. 

Rather than adapting USDT to the US, Tether launched USAT in January with Anchorage Digital Bank to establish a regulated presence in the US. 

That strategy so far appears to be gaining traction. USAT's market capitalization has risen to about $185mn from roughly $20mn in April. According to Anchorage's latest reserve attestation, redeemable tokens increased from 17.5mn in January to 156.5mn in May. 

But USAT is entering a market Open Standard is also targeting. "It (USAT) has been live since January and sits at about $185mn, chasing the same US institutional users Open Standard signed up before the token exists," Filippo Armani, head of research at Dune, told Sandmark. "Which is the caveat: OUSD isn't live. June 30 launched the entity, not the coin." 

While OUSD could provide a check to Tether's US ambitions, the competitive pressure on USAT won't extend to USDT, at least for now. Tether's flagship token serves a different market and benefits from deeply entrenched liquidity outside the US.

Dave Liebowitz, head of growth at private credit protocol Cap, said the native compliance of OUSD and Circle's USDC may give them an edge in the US over USAT. Should Tether eventually decide to make all of its issued stablecoins compliant with EU and US regulations, it may be too late, he said. 

"The risk is that by mid-2028, the US market has already reorganized around compliant alternatives, Circle, bank tokens, OUSD, and there's nothing left to come back to," he said. 

Still, Sid Powell, CEO of decentralized lender Maple Finance, says Tether's most likely strategy is to keep USDT focused internationally. 

"USDT is the offshore remittance and trading rail for much of the world. I expect Tether will keep that as a separate international product and not try to retrofit it for US compliance," Powell said.

That global position is reinforced by the network effect of USDT's existing liquidity, Paul Howard, senior director at Wincent, told Sandmark. "Liquidity attracts liquidity. What we're seeing is simply a segmentation of the market through regulatory frameworks. This is unlikely to materially affect the liquidity juggernaut that is Tether." 

Distribution economics 

While OUSD poses a challenge to Tether's ambitions to grow in the US via USAT, the yet-to-go-live stablecoin presents a different sort of challenge for Circle's USDC by attacking the coin's core funding model.

Circle reported $668mn in income from the reserves backing USDC in the second quarter, accounting for almost all of its $701mn in total revenue and reserve income. For its part, Tether, which does not disclose reserve income as a separate revenue line, reported $1.5bn in net operating profit for the quarter, led by returns from its US Treasury and repo portfolio. 

Instead of concentrating reserve economics with the issuer, OUSD plans to distribute earnings generated by its reserves among participating companies after deducting a management fee. It also promises institutions zero-cost minting and redemption. 

For Circle, that strikes directly at a business heavily dependent on distribution partners. USDC's strength comes not only from regulatory compliance and liquidity, but from integrations with exchanges, banks and payments companies that help put the stablecoin into circulation. 

Those relationships are costly. Circle reported $412mn in distribution, transaction and other costs in the second quarter, while Coinbase – one of its most important distribution partners – has also joined Open Standard. 

Harbind Likhari, chief product officer at MNEE Pay, said OUSD represents a different competitive model. 

Traditional issuers manage reserves, redemptions and product development, giving them advantages in liquidity, distribution and brand recognition, he said. Open Standard, by contrast, is positioning OUSD as shared financial infrastructure rather than a proprietary product. "It makes the stablecoin resemble industry infrastructure rather than a proprietary product," Likhari said. 

The consortium model has already drawn a response from Circle. Following Open Standard's announcement, Circle CEO Jeremy Allaire argued on X that consortium models create misaligned incentives, slow innovation and rarely produce durable competitive advantages. 

Competing for tomorrow 

Regardless, the most significant battle may not be for today's stablecoin users, but for the institutional payment flows that have yet to move onchain, according to Likhari, who says OUSD's opportunity lies outside crypto-native markets, where USDT already dominates. 

That is where the two competitive fronts could begin to overlap. As traditional financial institutions move more activity onchain, they are likely to favour stablecoins built around regulatory compliance, putting USDC and OUSD in a stronger position for those flows. OUSD's reserve-sharing model could give it an additional advantage by offering participating firms a direct economic incentive to support the token.

Arnold Lee, CEO of stablecoin infrastructure firm Sphere Labs, does not expect that competition to produce a single winner. Instead, he sees the market consolidating around a handful of leading stablecoins serving different currencies and use cases.

That suggests Open Standard does not need to displace USDT to reshape the stablecoin landscape. Winning the next wave of enterprise and institutional adoption could be enough. 

MNEE Pay's Likhari concurred. "If OUSD succeeds in becoming the preferred settlement asset for banks and payment providers, Tether could find itself increasingly concentrated in crypto-native markets while institutional liquidity grows elsewhere," he said.

Maple Finance's Powell put it in stronger terms. "The clock is ticking for Tether, but don't expect them to overhaul USDT's core structure," he said. 

Sandmark contacted Tether, Open Standard and Circle for comment but had not received responses by publication.