Circle Internet Group Has a Brand-New Stablecoin Rival. What Does That Mean For Circle Stock?
Yahoo Finance ·
On June 30, a coalition of more than 140 financial, tech, and retail giants -- including Visa , Mastercard , Stripe, BlackRock , Coinbase ( COIN +2.68% ) , Alphabet's Google, and Shopify -- backed a new stablecoin called Open USD (OUSD). Shares of Circle ( CRCL +7.08% ) , the fintech company that mints the USD Coin ( USDC +0.00% ) stablecoin, immediately plummeted after the announcement. Let's see why Circle's stock dropped, and whether that pullback is a buying opportunity for patient investors. Circle backs the USD Coin with its own cash and U.S. Treasury holdings. Most of its revenue comes from the interest earned on those assets. OUSD aims to disrupt that business model by sharing that reserve income with its ecosystem partners that distribute and use its coins. Therefore, companies now have a major reason to use OUSD instead of USDC. Unlike USDC, which is only managed by Circle, OUSD is managed by an independent board of partners. That decentralized governance democratizes the control of the stablecoin, making it much more appealing to companies that don't want Circle calling all the shots.
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