Circle CEO welcomed OUSD after explaining why it may not work

Circle CEO Jeremy Allaire's first response to the Open USD shock was so careful it didn't even name Open USD at all.

But after CRCL shares sold off on Tuesday, he came back with a 1,538-word post explaining why a rival stablecoin backed by Coinbase, BlackRock, Google and roughly 140 other companies may still have a hard time copying USDC.

Allaire wrote on X on Wednesday, July 1, that he had gotten "lots of questions" from Circle's investor community about OUSD, the new stablecoin from Open Standard, founded by Zach Abrams, who previously co-founded the stablecoin infrastructure firm Bridge.

• The post came roughly a day after Open Standard unveiled Open USD with more than 140 partners across payments, banking, tech and crypto, including Visa, Mastercard, Stripe, BlackRock, Google and Coinbase.

The response was framed as a direct view on the new competitor and ended with Allaire saying, "We are huge believers in growth in the stablecoin ecosystem and welcome OUSD as a new member of the community!"

But almost everything before that was a defense of why USDC is hard to displace.

• Commenting on OUSD, Allaire praised Circle's existing integrations across exchanges, DeFi venues and institutional services.
• He also cited Circle products such as CCTP and Gateway as software layers that make USDC more useful across blockchains.

What Allaire exactly said about OUSD

Then, the Circle CEO went after the OUSD pitch directly. But first, it's worth bringing up what Open Standard is selling exactly:

1. Businesses will be able to mint and redeem without fees or volume limits.
2. Reserve income, after a management fee, will flow back to participating companies.
3. Governance will be handled by a broad partner-led consortium.

And Allaire challenged all three. On free minting and redemption, he argued that market reality may eventually force different behavior, especially when stablecoins with better liquidity become the offramp for weaker competitors. Circle, he said, handles fee arrangements "through contractual mechanisms vs. a blanket fee exemption."

On revenue sharing, Allaire said Circle already gives the majority of its income to distribution partners, but keeps enough to fund the infrastructure behind USDC.

On consortium governance, Allaire said large groups of large companies "coordinate poorly, have misaligned incentives, slow things down and rarely create the space for real durable innovation and competitiveness."

Open Standard's whole launch leans on its huge partner list, and Allaire's pushback was pretty direct that getting big logos is one thing, while running a global stablecoin network is another.

• As The Coinformer pointed out earlier, Open Standard's announcement claims that "businesses across industries have signed up to use Open USD," but the announcement doesn't clearly define what "signed up" means for each participant.
• And it also remains unclear whether all named companies have formal partnership agreements with Open USD, committed integrations, or a looser role in the proposed network.

Lastly, Allaire also addressed the elephant in the room. Coinbase, Circle's long-standing USDC partner, is backing Open Standard. Despite that, the Circle CEO said the relationship between Circle and Coinbase remains "as strong as ever" and that many OUSD founding members are still expected to stay major USDC partners and customers.

• But Omar Kanji, a partner at crypto VC firm Dragonfly Capital, suggested in an X post that a Coinbase-Circle "break-up" looks "imminent," arguing that Coinbase is joining a tech and traditional finance stablecoin consortium while Circle is launching Arc, its own blockchain that could compete with Coinbase's payments business, products and Base.