Circle Shares Drop 17% as Open USD Stablecoin Challenges USDC Model

Shares of Circle Internet Group ($CRCL) slid 17.5% in a single session to close at $62.63, their lowest level in roughly four months, as markets digested the launch of a new consortium-backed dollar stablecoin, Open USD (OUSD). The selloff underscored a growing investor concern that Circle’s USDC-driven business model is facing a structural challenge as the stablecoin industry experiments with more ‘open’ and revenue-sharing frameworks.

The drop compounded an already sharp pullback. Circle is now down more than 40% over the past month, about 21% year-to-date, and roughly 51% below its 2026 peak. Some fund commentators have characterized the stock as a case where ‘crypto exposure’ can mask classic equity risks—namely margin sensitivity, partner concentration, and business-model durability in a fast-evolving market.

Street views remain divided. MarketBeat data cited Circle’s estimated fair value around $64.56, while the average 12-month price target stood near $117.38, with a wide dispersion between $190 on the high end and $55 on the low end. Notably, Compass Point analysts turned sharply more cautious, cutting their target to $55 from $97—an adjustment that aligns with the market’s reassessment of how defensible Circle’s economics are if stablecoin distribution partners gain more leverage.

At the center of the repricing is Open USD, a new dollar-pegged stablecoin launched by what reports describe as a consortium of more than 140 corporate partners spanning financial firms, crypto companies, and key USDC distribution players. The model’s defining pitch is partner alignment: OUSD is designed to redistribute a larger share of reserve interest income to participating members than traditional issuer-centric structures.

That proposition directly challenges Circle’s core profit engine. Circle derives approximately 99% of its revenue from interest earned on USDC reserves, making net income highly sensitive to both the level of interest rates and the company’s ability to retain economics in distribution agreements. In 2024, Coinbase ($COIN) reportedly paid Circle about $908 million in revenue-sharing related to USDC; analysts say the decision by major distributors to join the Open Standard alliance could increase pressure on Circle’s margins and bargaining power.

Market strategists also point to architecture. OUSD’s ‘open standard’ approach may erode the moat enjoyed by issuer-led stablecoins by making it easier for multiple stakeholders to coordinate issuance, distribution, and incentives under shared governance. Circle’s CEO has publicly raised concerns about consortium governance, referencing difficulties Circle faced in prior attempts to operate within similar multi-party structures—an implicit warning that shared control can complicate decision-making, risk management, and compliance responsibilities.

The competitive backdrop is already shifting. USDC’s market share is estimated to have fallen about 17% so far this year. Meanwhile, regulation is reshaping stablecoin supply lines, particularly in Europe as MiCA compliance changes which tokens can be offered and on what terms. Against that backdrop, OUSD’s arrival is being interpreted as an accelerant for an industry-wide move toward ‘shared economics’—a model that could force incumbents to choose between defending margins or protecting distribution.

Circle’s latest operating results added to the market’s caution. The company reported earnings per share that missed expectations by $0.06 and posted a net profit margin of about -2.76%. Analysts linking those figures to the current debate argue that when nearly all revenue is tied to reserve yield, any dilution of interest income—whether through revenue-sharing, competitive pricing, or partner renegotiations—can quickly translate into ‘existential margin pressure’.

For equity investors, the volatility risk is also rising. A one-day decline of 17% and reports that the stock could be excluded from certain Russell growth benchmarks may reduce passive inflows and complicate liquidity conditions. Institutional investors are estimated to hold roughly $25.25 million in $CRCL, though some allocators have reportedly begun reclassifying the position as primarily an equity-risk exposure rather than a proxy for crypto beta.

Circle has not announced a formal revised roadmap in response to OUSD. Still, market participants increasingly expect the company will need to revisit USDC distribution economics—potentially renegotiating revenue splits or incentives with key platforms and distributors to keep USDC competitive versus partner-friendly alternatives. Investors are likely to focus on any upcoming disclosures around USDC distribution costs, changes in revenue-sharing terms, or broader moves to diversify income streams beyond reserve interest.

Ultimately, the selloff reflects a larger question: whether the centralized, issuer-led stablecoin model can maintain its dominance as the market experiments with consortium governance, ‘open standards,’ and revenue-sharing that spreads reserve yield across ecosystems. With OUSD entering the arena, the balance of power in stablecoins appears to be shifting—and Circle is now a focal point for how incumbents respond to that shift.