Professor Xiang Fang, Professor Yang Liu, and Professor Haonan Zhou
22 July 2026
As the digitalization of money becomes increasingly mature worldwide, a significant new development is emerging in the stablecoin market. According to reports, over 100 financial and technology institutions, including Visa and Stripe, have joined forces to form the Open Standard alliance, which is expected to launch the US dollar stablecoin Open USD later this year. Open USD features zero minting fees and shared reserve interest, reconfiguring the yield on stablecoin reserves from the current issuer-dominated bilateral revenue-sharing arrangements into a sharing mechanism for the entire distribution network. Participants range from payment networks such as Visa and Mastercard, financial institutions such as BNY Mellon and Standard Chartered Bank to technology companies such as Google and IBM.
As soon as the news was announced on 30 June, the share price of stablecoin issuer Circle fell by as much as 17%, indicating that investors were beginning to realize that the focus of stablecoin competition is shifting from “who can issue coins” to “who can control the network for distribution, settlement, and yield allocation”. Competition is moving from a contest over the credibility of individual tokens to a multidimensional struggle over settlement rails, payment interfaces, distribution channels, and revenue allocation rights.
The battle for Payment networks: from stablecoin issuance to on-chain settlement
Over the past year, competition in stablecoin payment infrastructure has clearly intensified. First, stablecoin issuers have extended their reach into underlying settlement and payment networks. In August 2025, Circle announced the release of Arc, a native blockchain built around the mainstream stablecoin USDC. For use cases built around USDT, Stable has proposed using USDT as a native asset for payments and transaction fees, upgrading USDT’s existing global liquidity into a more specialized payment infrastructure. At the payment network layer, Circle has further rolled out the Circle Payments Network, bringing banks, payment service providers, virtual asset service providers, and enterprises into a compliant stablecoin payment network.
Meanwhile, traditional payment networks and fintech companies are making deeper inroads into on-chain settlement. Visa has introduced stablecoins such as USDC into the back-end settlement of its card network and is gradually building on an on-chain settlement platform that supports multiple currencies and multiple blockchains. In addition to promoting stablecoin card payments and merchant acceptance, Mastercard announced in March 2026 that it would acquire BVNK, a leading stablecoin infrastructure company, for up to US$1.8 billion, to strengthen its ability to connect on-chain payments with fiat rails. Stripe and Paradigm, meanwhile, unveiled Tempo, a payments-first blockchain, in September 2025, providing shared payment and settlement infrastructure for multiple stablecoins rather than tying the payment network to a single issuer.
Clearly, stablecoin competition is no longer a one-dimensional contest among issuers, but rather a redrawing of boundaries between two types of players. Mainstream stablecoin issuers such as Circle are moving from “issuing coins” to “building networks”, while payment companies such as Visa, Mastercard, and Stripe are entering on-chain settlement from the payment-network side. The former have advantages in stablecoin liquidity, issuance experience, and distribution within the crypto ecosystem; the latter excel in merchant networks, banking relationships, compliance capabilities, and payment scenarios. Success in the stablecoin payment market depends not only on the credibility of stablecoins, but also on whether companies can take the lead in embedding on-chain settlement into real-world payment flows.
The battle for reserve yields: from profit distribution to network incentives
What truly enables Open USD to strike a nerve with the market is the most central issue in the stablecoin business model: who receives the yield on reserves, how it is distributed, and which network participants it is used to incentivize. Under the traditional model, issuers promise one-to-one redemption for US dollars and invest the fiat currency they receive in reserve assets such as US Treasuries. Since stablecoins typically do not pay interest to holders, the yield on reserve assets becomes the issuer’s most important source of revenue. In fact, issuers do not keep all this revenue for themselves. For example, Circle has long shared profit with distribution channels such as the cryptocurrency exchange Coinbase, showing that the existing model already includes revenue allocation between issuers and core channels. The key point, however, is that such allocation is mostly conducted through bilateral cooperation, with stablecoin issuers still playing the dominant role.
Open USD’s innovation lies in its attempt to rewrite the above-mentioned yield and distribution structure. On the one hand, it does not rely on a single issuer, but instead organizes the issuance and circulation network of the stablecoin through an institutional alliance. On the other hand, it features zero minting fees and zero redemption fees, while sharing reserve-asset yields with participants within the alliance. In other words, Open USD is not merely launching another US dollar stablecoin; it aims to transform reserve yields from issuer-led bilateral revenue sharing into an incentive mechanism spanning the entire distribution network.
Assuming more banks, payment companies, exchanges, and technology platforms are incentivized by yield sharing to integrate, promote, and use Open USD, this would help the stablecoin rapidly form a circulation network. Stablecoin use itself also exhibits network effects: the more users it has, the more it can attract merchants, wallets, exchanges, and payment institutions to participate. It is particularly noteworthy that the participants include cryptocurrency exchanges such as Coinbase, which has maintained a long-standing cooperative relationship with Circle. This means that Open USD will pose a direct challenge to the existing stablecoin distribution landscape.
The battle for Interoperability: fragmented ecosystems and network effects
Currencies have strong network effects because “use leads to acceptance, and acceptance leads to more use”. Given stablecoins’ crypto-native attributes and the current competitive dynamics in stablecoin payment infrastructure, concerns have naturally arisen about the “fragmentation” of their ecosystems. The fact that the same issuer issues a stablecoin under the same name on multiple blockchains does not mean that these tokens are inherently interoperable. Cross-chain transfers often require reliance on “bridges”, exchanges, or other intermediary mechanisms. The Bank for International Settlements noted in its 2026 Annual Economic Report that if payment systems lack interoperability and are fragmented, it will be difficult for them to accumulate network effects; instead, they will merely become localized payment tools scattered across different blockchains, making it impossible to build a unified digital currency network.
The key to generating network effects lies in improving interoperability among different payment tools and platforms, thereby fully connecting the supply and demand sides. We recently used stablecoin holding data from approximately 200 million end-user wallets across eight major blockchains to conduct an empirical study. The results show that, although issuer credibility and reserve quality are certainly important, the local ecosystem on the demand side is equally decisive for success. Stablecoin choices are highly sticky: more than 90% of wallets use only a single stablecoin.
Moreover, new wallets have consistently contributed about one quarter of stablecoin transaction activity. This indicates that the initial choice users make when entering a particular chain, wallet, or transaction context has a lasting impact on subsequent market share. More importantly, the differences in the market shares of different stablecoins across different blockchains are significant and persistent, and are strongly influenced by conditions such as on-chain liquidity and existing user networks (see Note). This suggests that the network effects of stablecoins are not created from the top down by issuers or alliances, but gradually accumulate through specific transaction contexts and user entry points.
Traditional payment systems have never operated on a single rail. Card networks, wire transfers, instant payments, and cross-border correspondent banking networks have long coexisted, each serving different scenarios. Looking ahead, stablecoin payments are likewise unlikely to be monopolized by a single blockchain or a single stablecoin. The crucial question is who can connect fragmented chains, wallets, exchanges, and payments, enabling stablecoins to be used as smoothly as ordinary payment tools. Whoever can do so will be able to reshape stablecoins’ network effects in a fragmented ecosystem and thereby emerge as the market leader.
Note: Fang, Huber and Zhou. “Global Reach, Local Depth: Stablecoin Choice Across Chains.” 2026.
