Open USD Stablecoin Announcement Hits Circle Stock Hard

Morgan Stanley notes Open Standard announced Open USD, a new U.S. dollar-backed stablecoin for global money movement, and points out that the consortium backing it includes Visa (V), Stripe, BNY Mellon (BNY), BlackRock (BLK), Klarna (KLAR), Chime (CHYM), Alphabet (GOOGL), Coinbase (COIN), Mastercard (MA), Shopify (SHOP), DoorDash (DASH), Corpay (CPAY) and others. Open Standard looks like a competitive risk for Circle (CRCL) from both a governance perspective as well as the underlying revenue model, the analyst tells investors. Coinbase's inclusion in the Open Standard consortium "may not complicate the August renewal, but could be increasing the temperature," adds the analyst, who still thinks it is "very unlikely" Coinbase voluntarily steps away from the Circle partnership because the deal remains quite favorable. While Open Standard and Circle's Arc both "raise the strategic tension," Coinbase remains in a strong position with respect to its ability to monetize USDC, build Base, expand payments, and preserve strategic optionality, according to the analyst. The firm has an Equal Weight rating and $106 price target on Circle shares.