Launch of the Open USD alliance triggers CRCL sell-off, but Bernstein remains positive on Circle's stablecoin network

Overview

This report comments on the launch of Open USD by Open Standard together with more than 140 partners. OUSD is a dollar-backed stablecoin for global payments and settlement, using alliance governance and sharing reserve income among partners. CRCL shares closed down 17.5% after the announcement, as the market worried that Circle's USDC reserve income and distribution advantages would be weakened. Bernstein's core judgment is that OUSD does create a short-term competitive disruption, but the recognition of the stablecoin space by mainstream finance, payments, and technology platforms instead reinforces the long-term industry adoption thesis; Circle remains the current leading stablecoin network.

Core views

The report presents six core views: first, the joint launch of a stablecoin by more than 140 partners is a major validation of the stablecoin category; second, stablecoin issuance is a network business, and multiple winners may coexist in the future, but USDC currently still leads in transaction volume and distribution network; third, liquidity in crypto capital markets is crucial for stablecoin cold-starts, and Circle has established a foundation through Coinbase, Hyperliquid, Polymarket, and mainstream wallets; fourth, uncertainty remains around OUSD's governance, operating structure, and revenue-sharing formula; fifth, Coinbase benefits significantly from USDC reserve income, making the cost of changing the primary distribution relationship high; sixth, Circle and Coinbase already have precedents of sharing income with large anchor partners, and can continue expanding the USDC network through economic terms.

Analysis framework

The report focuses on stablecoin network effects, distribution channels, crypto liquidity, reserve income allocation, and valuation methods. The authors first assess the potential impact of OUSD's business model on Circle, then compare USDC's existing transaction volume, partner ecosystem, and flexibility in revenue sharing, and finally use DCF to support CRCL's target price and relative valuation to support COIN's target price.

Methodology notes

• Valuation methodsLong-term DCF

  CRCL target price 190.00 USD

  Bernstein uses a long-term DCF valuation for Circle, assuming long-term expansion of TAM for stablecoins in payments and stablecoin-native financial services, with a WACC of 10.3% and a terminal growth rate of 2%, arriving at a target price of 190.00 USD, equivalent to about 35x 2027 adjusted EV/EBITDA.

• Valuation methodsRelative valuation

  COIN target price 330 USD

  The report values Coinbase at 25x 2027E P/E, a multiple consistent with the average level of comparable crypto, fintech, and brokerage peers, resulting in a target price of 330 USD.

• Industry analysisStablecoin network economics

  Distribution, liquidity, and reserve income sharing

  The report views stablecoins as a network business, emphasizing that broad distribution, partner networks, on-chain liquidity, and transaction velocity determine competitiveness; OUSD's innovation lies in converting reserve income normally retained by the issuer into shared income for partners.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• CRCL.US / Circle Internet Group

  The report's core subject and the main representative of the USDC stablecoin network.

  Strengths

  USDC is currently a leading stablecoin network, with high transaction velocity, Coinbase distribution, new anchor partners such as Hyperliquid and Polymarket, and a large base of on-chain wallet holders.

  Weaknesses

  Revenue is highly dependent on reserve interest, and it may need to share more economic benefits with distribution partners in the future.

  Comparison

  Compared with OUSD, Circle already has mature liquidity and operating systems; compared with Tether, Circle places greater emphasis on compliance and cooperation with mainstream finance.

  Risks

  New entrants such as OUSD and intensifying competition from banks and payment companies; falling interest rates compressing reserve income; macro volatility in digital assets affecting demand.

• COIN.US / Coinbase Global Inc.

  Circle's founding and largest USDC distribution partner, and also a participant in the OUSD alliance.

  Strengths

  Has important crypto trading and on-chain distribution capabilities; the Base chain and Coinbase platform can help stablecoins gain liquidity and a user base.

  Weaknesses

  USDC reserve income is close to 20% of total revenue, creating relatively high dependence on a stable revenue source.

  Comparison

  Compared with Circle, Coinbase is more focused on trading, custody, and on-chain distribution platforms; compared with other OUSD partners, it has greater direct economic interest in the USDC network.

  Risks

  If stablecoin distribution relationships change, trading competition intensifies, or U.S. regulation is delayed, revenue stability and valuation may come under pressure.

• Open USD / OUSD

  A new alliance stablecoin operated by Open Standard and a potential competing product.

  Strengths

  More than 140 partners cover payments, technology, financial services, and the crypto ecosystem; minting and redemption are free with no issuance cap, and its distribution capability may be stronger than that of new entrants from the pure crypto ecosystem.

  Weaknesses

  Alliance governance, operating structure, partner integration, and the reserve income sharing formula remain unclear.

  Comparison

  Unlike the single-issuer model of USDC or USDT, OUSD disperses decision-making and reserve economics across a partner network.

  Risks

  If governance efficiency is low, partner contributions are uneven, or integration friction is high, OUSD may struggle to build sufficient monetary base and transaction velocity.

• SHOP.US / Shopify Inc.

  One of the technology and commercial distribution partners in the OUSD alliance.

  Strengths

  Has a merchant network and payment scenarios, which could bring potential real-world commercial payment use cases for stablecoins.

  Weaknesses

  The report does not discuss Shopify's own financial impact or the specific depth of integration.

  Comparison

  Compared with Circle and Coinbase, Shopify is not a core stablecoin issuance or crypto liquidity asset, but rather a potential application-side distributor.

  Risks

  Slow merchant adoption, user experience issues, or regulatory restrictions may reduce the pace of stablecoin payment adoption.

Key data

• Number of Open USD partners140+Partners include Visa, Stripe, Mastercard, BlackRock, BNY, Coinbase, Ripple, Google, Shopify, and others.
• OUSD launch plansecond half of 2026Operated by Open Standard, with Zach Abrams as founding CEO.
• CRCL share price reaction after the announcementclosed down 17.5%The market is concerned about competition from OUSD and pressure on Circle's reserve income sharing.
• CRCL rating and target priceOutperform / 190.00 USDBernstein's rating and target price for Circle Internet Group.
• COIN rating and target priceOutperform / 330 USDThe report also provides a rating and target price for Coinbase Global Inc.
• USDC stablecoin monetary base shareabout 28%The report believes this understates USDC's transaction velocity advantage.
• USDC transaction volume$4.5 trillion in 2025; $5.3 trillion in the first half of 2026At the current run rate, this is about 140% growth versus 2025.
• USDC transaction volume shareabout 40% in 2025; about 60% year to date in 2026Reflects USDC's network advantage in transaction activity.
• Circle operating, technology, compliance, and marketing costsabout $500 million; about 70 bpThe report uses this cost to compare with OUSD's model of replacing centralized marketing costs through partner revenue sharing.
• Coinbase USDC revenue exposureUSDC reserve income is close to 20% of Coinbase's total revenueThe report believes the cost for Coinbase to change the primary USDC distribution relationship is high.
• Coinbase reserve income sharingclose to 50% of USDC reserve incomeBased on the distribution agreement between Circle and Coinbase.

Impact & implications

The launch of OUSD weighs on CRCL valuation sentiment in the short term because it may challenge the Circle/Tether duopoly and push the industry from issuer-exclusive reserve income toward partner revenue sharing. But over the medium to long term, the entry of more than 140 partners across payments, technology, banking, and financial services strengthens the possibility of stablecoins becoming mainstream payment and financial infrastructure. For Circle, the key is not just monetary base share, but also USDC's transaction velocity, crypto liquidity, anchor partners, and negotiable revenue-sharing capability. For Coinbase, participation in OUSD is more likely about expanding mainstream stablecoin usage and preserving optional growth, rather than immediately giving up the economics of USDC.

Risks

• After regulatory clarity, banks, payment companies, and technology platforms may accelerate entry into the stablecoin market, compressing the existing duopoly advantage of Circle/Tether.
• OUSD's alliance governance, operating structure, and revenue-sharing formula remain unclear, and execution uncertainty may affect judgments on the competitive landscape.
• 99% of Circle's revenue is driven by interest income; if interest rates decline rapidly, reserve income and valuation will come under pressure.
• As a new asset class, digital assets have limited price history and may experience high-beta volatility when affected by macro conditions and U.S. recession risk.
• Coinbase faces competition from exchanges and brokers such as Binance, Robinhood, and Schwab, as well as the risk of delayed U.S. digital asset regulation or political changes.
• Circle still has short-term dependence on crypto capital market liquidity and core distribution partners.

What to watch

• OUSD's launch progress in the second half of 2026, its first real use cases, and the scale of minting and redemption.
• Open Standard's partner allocation formula for reserve income, governance structure, and management fee level.
• The actual depth of integration and transaction volume contribution from partners such as Visa, Stripe, Mastercard, Google, Shopify, and Coinbase.
• Whether Circle continues to share a high proportion of USDC reserve income with anchor partners such as Binance and Hyperliquid, and whether it adds new large distribution partners.
• Changes in USDC monetary base share, transaction volume share, on-chain wallet holdings, and trading platform liquidity.
• Progress in U.S. and global stablecoin regulation, the path of interest rates, and changes in the target price assumptions for CRCL/COIN.