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Coinbase's stablecoin move threatens circle's $908 m deal

Coinbase's Stablecoin Move Sparks Concerns | Circle's $908M Deal at Risk

By

Maximilian Müller

Jul 2, 2026, 06:36 AM

Edited By

Fatima Al-Farsi

Updated

Jul 2, 2026, 12:19 PM

2 minutes needed to read

Illustration showing the Coinbase logo alongside the Open USD stablecoin, with USDC symbol in the background to represent the competitive shift in the market.

In a surprising shift, Coinbase announced its backing for a new stablecoin, Open USD, potentially jeopardizing its existing $908 million partnership with Circle. This coalition also includes major players like Stripe, Visa, and BlackRock, which has since impacted Circle’s USDC, causing a 17% drop in value.

A Shift in the Stablecoin Market

Coinbase's involvement indicates a major realignment in stablecoin dynamics. Under the previous agreement, Coinbase earned all reserve income from USDC held on its platform and split off-platform profits with Circle. However, with the introduction of Open USD, this arrangement faces serious disruption.

"Welcome OUSD. Player 2 has entered the game," commented Tether CEO Paolo Ardoino on the announcement, emphasizing the competitive nature brewing in the space.

The new stablecoin aims to refresh conventional revenue models by distributing reserve income to its 140+ partners instead of concentrating it within the issuer. Stripe has even positioned Open USD as the default for businesses using its platform, reinforcing the challenge for USDC.

User Reactions and Uncertainties

Commenters express mixed feelings about the future of USDC. One user noted, "Agreed. USDC is still used by too many people. If we do see a switch happen it will take a lot of time," while another emphasized the need for stablecoins that function as active financial tools, not just static assets.

"Stablecoins are becoming something people actually use across payments, transfers, exchange flows, and collateral," one commenter observed.

The rapid changes around Open USD have left many pondering the implications of holding USDC.

Navigating the Emerging Competition

  • Market Dynamics: Users are wary about how USDC will fare against Open USD as more businesses possibly pivot towards it.

  • Institutional Support: Backing from heavyweights like BlackRock lends credibility to Open USD, which could threaten USDC's market share.

  • Functionality of Stablecoins: The evolution of stablecoins into multi-functional tools for payments and exchanges is gaining traction.

Key Takeaways

  • 🔺 Open USD's backing by a broad coalition indicates a significant challenge to USDC’s dominance.

  • 🔽 User sentiment reflects uncertainties about USDC's stability amidst this shift, with ongoing discussions around its future viability.

  • 💬 "It will take a lot of time" - A user pondering the pace of change in stablecoin preferences.

As the landscape evolves, the full effects of these changes will unfold in the coming months, indicating a critical moment for both Coinbase and Circle.