Stablecoin Competition Is Changing and the Biggest Issuer May Not Win

 

Within ten days this summer, a consortium of more than 140 companies proposed sharing the reserve income that has made stablecoin issuers rich, and Circle won final federal approval for a national trust bank. Two very different models for the digital dollar are now heading toward each other.

 

 

On June 30, a coalition of payment networks, banks, fintech platforms, and technology companies unveiled Open USD, a proposed stablecoin whose defining feature is not its peg but its economics. Income from its reserves is meant to flow to the institutions that help it circulate. On July 10, Circle received final OCC approval to establish a federally supervised national trust bank, bringing the infrastructure behind USDC under direct federal oversight. Neither event alone marks a turning point. Taken together with MiCA now in force across Europe, South Korea's continuing debate over won-denominated stablecoins, and the steady arrival of banks and payment companies, they confirm that stablecoins have outgrown their original role as plumbing for crypto trading.

 

The first phase of this market rewarded whoever could issue the most trusted dollar token. The second rewarded whoever built the deepest liquidity. The next is likely to reward whoever gives banks, payment companies, and merchants the strongest commercial reason to carry one token rather than another. That contest, over the economics of distribution, is only starting to take shape.

 

 

Open USD remains a planned launch rather than a proven ecosystem, and any assessment should start from that fact. Its design nonetheless challenges the industry's most profitable arrangement. Rather than one issuer keeping most of the reserve economics while others handle circulation, participating businesses are expected to receive a share of reserve income under the proposed model. Minting and redemption are designed to carry no volume-based fees, and governance is meant to sit with the consortium rather than a single corporate issuer.

 

The stakes are considerable because stablecoins are not ordinary software. Their economics derive from the assets held against their liabilities, and at scale reserve income becomes a substantial pool of value, along with influence over digital-dollar liabilities, Treasury demand, settlement flows, and user relationships. Seen in that light, how reserve economics are divided matters far more than any competition over transaction fees.

 

 

Circle has taken the opposite approach, and it should not be underestimated. Final OCC approval establishes a national trust bank, a fiduciary and custody institution rather than a conventional commercial bank, with reserve management planned as a future capability. The approval embeds USDC more deeply in the regulated U.S. financial system, adding to advantages Circle already holds: regulatory credibility, a global brand, institutional liquidity, and an ecosystem built over a decade.

 

The market will now test whether trust concentrated in one regulated issuer outweighs incentives spread across many institutions. The answer is not obvious.

 

 

Running a global exchange gives me a particular vantage point on this question. For platforms, the practical issue is no longer which stablecoin to support but which network can consistently deliver deep liquidity, efficient redemption, cross-chain interoperability, payment acceptance, and durable incentives. Exchanges are unlikely to commit to a single issuer. The more probable outcome is that platforms connect several stablecoin rails and let users and market structure determine where volume settles. Once the infrastructure layer declines to pick a winner, competition shifts toward whoever offers distributors the best terms.

 

None of this guarantees that the consortium model succeeds. A board of many partners can improve neutrality, but larger alliances tend to decide slowly in a market that moves daily. Sharing reserve income does not by itself create trading depth; USDT and USDC still rest on market makers, cross-chain infrastructure, and user habits accumulated over years. A consortium must also answer the questions regulators put to any issuer: who issues the token, who manages the reserves, who guarantees redemption, and who is accountable when something fails. The quality of those answers will determine whether the model can scale.

 

 

Europe's MiCA, a more prescriptive framework with tighter issuer requirements, was never solely about consumer protection. Dollar-backed tokens raise questions of monetary sovereignty. The more European payments and settlement run through them, the further the dollar's reach extends inside Europe's financial system. Stablecoin regulation is in that sense also monetary strategy, and it is likely to accelerate regulated euro-denominated alternatives and bank-backed coalitions. South Korea's continuing policy debate reflects a similar concern about preserving the relevance of a domestic currency once money becomes programmable.

 

 

Banks face a version of the same choice: resist stablecoins, issue their own, provide custody and reserve services, or join shared networks. Open USD suggests the fourth path will gain importance. Few institutions want to launch another fragmented proprietary token if a neutral rail with liquidity, interoperability, and aligned incentives already exists. The market may therefore divide less along the lines of USDT versus USDC, or crypto versus banks, than among rival ecosystems led by issuers, banks, payment companies, and consortia.

 

Artificial intelligence could compress the timeline. AI agents paying for data, compute, and services will generate global, continuous, machine-initiated transactions, an environment well suited to stablecoins. Even then, technology alone will not decide the outcome. AI platforms will choose on reliability, compliance, liquidity, and acceptance, criteria on which a token carried by a broad coalition of institutions may hold an advantage over any standalone issuer.

 

Circle may yet become one of the most important institutions in the digital-dollar economy. But the future is unlikely to produce a single new digital bank. A more plausible outcome is a small number of competing monetary ecosystems, each binding issuers, banks, payment networks, and technology platforms to the same incentives.

 

The first era of stablecoins rewarded issuers. The second rewarded liquidity. The next may reward those who can align institutions. The winner may not be the company that owns the token, but the network that gives everyone else the strongest reason to build on it.

 

 

Vugar Usi is the CEO of MEXC, where he leads the company's global strategy, growth, and long-term vision to build a more open and inclusive digital asset ecosystem. Prior to joining MEXC, he served as Chief Operating Officer at Bitget, where he played a key role in expanding the platform's global operations and user base. With more than 15 years of experience in marketing, communications, and brand strategy, Vugar has worked with leading global brands including Carlsberg, Facebook, Coca-Cola, and Twitter. He earned a Master of Public Administration from Harvard University and served as an advisor to the United Nations Office of the High Commissioner for Human Rights on minority issues.

 

 

This article represents the personal views of the author and is provided for informational purposes only. It does not constitute investment advice, financial advice, legal advice, or tax advice, and should not be relied upon as the basis for any decision. Digital asset prices are highly volatile and may fluctuate significantly; participation in digital asset markets involves substantial risk, including the possible loss of principal. Readers should conduct their own research and consult independent professional advisors before making any financial decisions. MEXC assumes no responsibility or liability for any investment losses arising from the use of this content.