—LAW DAY 344—
The Genius Act paved the way for the biggest financial giants to enter the digital asset space.
This is what they will do once a law like Clarity is passed. They will eat everything alive. https://t.co/V7tdkL79vQ
—LAW DAY 344—
The Genius Act paved the way for the biggest financial giants to enter the digital asset space.
This is what they will do once a law like Clarity is passed. They will eat everything alive. https://t.co/V7tdkL79vQ
Circle just lost a fifth of its value in a single day, and the blow came from its own inner circle. Its stock fell 17 percent after a new stablecoin launched, which is normal.
What is not normal is who built it…. the asset manager that runs roughly 80 percent of Circle's reserves, the exchange that co-founded USDC and is paid nearly a billion a year to distribute it, and the bank that holds the money. BlackRock, Coinbase, and BNY Mellon all backed a rival to the coin they help operate. The story is not really about a competitor.
Circle makes money one way, and it explains the whole reaction. $USDC is a digital dollar.
For every one in circulation, Circle holds a real dollar in cash and short-term Treasuries, roughly 74 billion dollars of reserves, and the interest those reserves earn is almost the entire business. About 80 percent of that pile sits in one fund, the Circle Reserve Fund, managed by BlackRock and custodied by BNY Mellon.
To get USDC into the world, Circle pays distributors. In one recent
After reading Jeremy's tweet, I think it missed the key point: USDC's focus should not be liquidity; mainstream stablecoins should not focus on liquidity either. If one is still worried about liquidity, it doesn't qualify as a mainstream stablecoin. The focus should be on use cases and acceptance.
Payments are also a use case. Currently in the crypto space, USDC has achieved the #1 net transaction volume, but the world is large and crypto is just a small piece. What has USDC done at the application layer? What checkpoints has it unlocked in the real world?
More importantly, Europe and America are credit-based economies. I have previously written about why stablecoins cannot challenge credit cards: they lack a credit mechanism and a post‑use pay‑later mechanism, which is an inherent shortcoming. However, a bank‑issued stablecoin can fill this gap; launching a stablecoin credit card backed by bank credit is feasible.
Especially regarding acceptance, USDC is rarely directly exchangable for fiat at banks, whereas a bank‑issued stablecoin is likely to be supported for bank acceptance. Hence Open USD can be seen as a digital dollar rather than merely a stablecoin.
The biggest use of a digital dollar is cross‑border settlement, with inbound and outbound transfers settling in seconds, especially when bank guaranteed; institutions and enterprises can use it, which is hard for Circle and USDC to achieve.
We’ve had lots of questions from our investor community looking for thoughts on OUSD, and so I thought I’d share my direct views here for anyone.
Stablecoin networks are platform and network effect businesses that are established over a long period of time, tend towards winner‑take‑most market structures, and resemble other internet platform utility markets. There are several layers that drive this.
First, stablecoin networks effectively act as public protocols and software layers on the internet and their network strength is a matter of the number and range of applications and services that integrate to the network. Every time a developer or service provider integrates to the network, it brings more network effects. This attracts more developers and adds more utility and more network effects. This then drives demand for the digital currency itself, which then reinforces these network effects through liquidity network effects.
We have realized this at a massive scale with the USDC network today — thous
Circle CEO Responds to OUSD Competition: USDC's Moat Comes from Network Effects and Liquidity Advantage
Circle CEO Jeremy Allaire wrote that the stablecoin market has strong network effects, with the moat coming from three aspects: developer ecosystem, global liquidity depth, and regulatory integration.
He disclosed that USDC has been integrated with thousands of service providers, with on‑chain transaction volume nearing $30 trillion in Q1 2026, accounting for about 80% of USD‑stablecoin trading volume, USDT about 20%, and the remainder less than 0.5%.
Regarding OUSD's proposed free mint‑and‑redeem and profit‑sharing model, Allaire believes that fully relinquishing reserve earnings could lead to insufficient infrastructure investment, and alliance governance decisions may also become sluggish. He said he welcomes OUSD joining the ecosystem, but long‑term success will still depend on liquidity, compliance, and sustained capital investment.
We’ve had lots of questions from our investor community looking for thoughts on OUSD, and so I thought I’d share my direct views here for anyone.
Stablecoin networks are platform and network effect businesses that are established over a long period of time, tend towards winner‑take‑most market structures, and resemble other internet platform utility markets. There are several layers that drive this.
First, stablecoin networks effectively act as public protocols and software layers on the internet and their network strength is a matter of the number and range of applications and services that integrate to the network. Every time a developer or service provider integrates to the network, it brings more network effects. This attracts more developers and adds more utility and more network effects. This then drives demand for the digital currency itself, which then reinforces these network effects through liquidity network effects.
We have realized this at a massive scale with the USDC network today — thous
USD Coin is a stablecoin brought to customers by Circle and Coinbase. It is an open source, smart contract-based stablecoin. True financial interoperability requires a price stable means of value exchange. CENTRE’s technology for fiat-backed stablecoins brings stability to crypto. The initial implementation is USD Coin (USDC), an ERC-20 token creating possibilities in payments, lending, investing, trading and trade finance — and the ecosystem will grow as other fiat currency tokens are added.