On June 30, 2026, Circle's stock plummeted 17% in a single day — not because a competitor built a better product, but because the Open Standard (OS) alliance announced Open USD (OUSD), revealing that Circle's compliance moat was not as impregnable as the market had assumed. The alliance roster includes Visa, Mastercard, BlackRock, Stripe, Coinbase, Google, Shopify, Standard Chartered, BNY, DBS, OCBC, ANZ, UOB, and more.

The deeper story is not about OUSD versus USDC. It is about the evolving nature of stablecoins themselves — from a compromise born of banking exclusion to a superior financial infrastructure that will eventually be superseded by native on-chain fiat.

Stablecoins were born as a workaround: banks refused to serve Bitcoin exchanges. When traders sold Bitcoin, they had no easy way to withdraw fiat. Exchanges issued dollar-pegged tokens so traders could "lock in" dollar value within the crypto ecosystem without touching the traditional banking system. USDT was launched by Hong Kong-based exchange Bitfinex.

The paradox is stark: today, you can buy Bitcoin through regulated financial institutions. Hong Kong's licensed exchanges connect directly to bank accounts. The original reason for stablecoins' existence no longer exists.

So do we still need them? Yes — but not the old kind. They now have many names: tokenized deposits, central bank digital currencies (CBDCs). Their essence is on-chain native fiat.

Stablecoins have evolved from a workaround into a better solution. Traditional banking cross-border transfers still take 1–5 business days, charge $15–50 in fees, operate only during weekday business hours, and offer zero transparency.

Stablecoins, by contrast, operate 24/7, settle in seconds, execute automatically, and cost less than one-tenth of wire fees. More importantly, funds are fully visible on the blockchain throughout the entire journey — something traditional banking cannot offer.

USDT: The Gray Market Lifeline

Tether (USDT), born in 2014, solved a real problem: allowing crypto traders to lock in dollar value without bank support. Today it dominates with a $187.9 billion market cap, nearly 60% of the stablecoin market. But its reserve transparency has been perennially questioned, and allegations of minting USDT out of thin air to manipulate Bitcoin prices persist.

Its loose regulation and borderless nature make it ideal for telecom fraud and illegal gambling. USDT has become the lifeblood of the gray economy — an open secret in the industry.

USDC: The Compliance Play

USDC, launched in 2018 by Circle and Coinbase, took the opposite path: compliance as the core selling point. Over seven years, Circle obtained licenses in multiple jurisdictions and became the first stablecoin authorized under the EU's MiCA framework. USDC reserves are audited monthly by Deloitte. USDC became the bridge connecting DeFi and traditional finance.

Circle's strategy was clear: use long-established compliance barriers and network effects to entice traditional financial firms into deep participation, becoming the "sole legitimate gateway" to the stablecoin ecosystem.

The Shared Profit Model

Traditional stablecoins (USDT, USDC) share the same profit model: you deposit $1, the issuer gives you 1 token, then the issuer uses your money to buy U.S. Treasuries and pockets the spread. Tether earned a reported $10 billion in 2025 from this model. Circle's 2025 annual report shows revenue of $2.747 billion, with reserve income contributing $2.637 billion. In this model, stablecoins are profit centers for issuers.

OUSD's pitch is classic crypto marketing: reserve yield returned to all members, no minting or redemption fees, a payment alliance owned and governed by users. Reality check: on July 3, 2026, South Korea's Chosun Ilbo reported that multiple Asian companies on the participant list clarified they had not signed any agreement with OS.

In the author's view, OUSD is a project likely to fail. One hundred and forty institutions from completely different industries, of varying sizes, with divergent compliance requirements, do not share a common pain point.

Yet the threat OS poses is real in a different way. Its emergence made the market realize that USDC's network-effect moat is not as deep as imagined. USDC's advantage comes from traditional financial institutions' recognition, bought with hundreds of millions in annual compliance costs. This OUSD declaration is essentially a "user mutiny".

Global crypto regulation is tightening. From Binance failing to obtain an EU MiCA license, to European compliant exchanges delisting USDT entirely on July 1, 2026, the crypto world is facing a regulatory crackdown. In the future, USDT will retreat fully into the gray zone.

After USDT exits the compliant market, USDC will inevitably replace its position. The author expects USDC to claim the top stablecoin market cap within one to two years.

However, the "deposit $1, get 1 token" model remains a compromise. Native on-chain dollars (tokenized deposits + CBDCs) are the ultimate form of stablecoins — the true next-generation financial infrastructure. If on-chain native dollars achieve seamless cross-bank, cross-border, cross-platform circulation and regulatory permission to enter DeFi and smart contracts, then USDC will be eliminated.

The future digital dollar is not an on-chain substitute of fiat, but programmable money native to the blockchain — freely circulating, programmable, enabling instant settlement while allowing SMEs and even individuals to directly participate in a SWIFT-like network.

Circle's future stock performance will be a tug-of-war between mid-term tailwinds and long-term headwinds.

This article is for reference only and does not constitute investment advice.

Standard Kepler Research | standardkepler.com