Coinbase Is Backing a USDC Rival While Cashing Checks From Circle
Coinbase is collecting revenue-sharing payments from Circle's USDC while simultaneously backing Open USD, a competing stablecoin network that offers partners a bigger cut of reserve income. That is not a rumor. That is the current state of the stablecoin market.
Circle and Coinbase have long operated as the backbone of USDC, splitting the yield generated from the billions in reserves sitting behind the peg. The arrangement made both companies very rich, especially as interest rates climbed. But now Coinbase is also backing Open USD, a rival network structured to pass more reserve income directly to distribution partners after a management fee. The implication is obvious: if the economics are better elsewhere, loyalty becomes a business decision, not a given.
Why This Actually Matters
USDS has over $60 billion in circulation. USDC sits at roughly $45 billion. The stablecoin wars are not hypothetical anymore. They are happening in boardrooms and partner agreements right now.
Circle's entire growth strategy depends on partners choosing to integrate and promote USDC over competitors. Coinbase is not just any partner. It is the largest USDC distribution partner in existence. If Coinbase shifts even a fraction of its stablecoin promotional weight toward a network that pays it more, the downstream effects on USDC supply and adoption could be significant.
Circle knows this. The company is now publicly defending its revenue-sharing model, arguing that its structure provides stability, regulatory clarity, and long-term value that newcomers cannot match. That kind of public defense only happens when the threat is real and the pressure is being felt internally.
The Bigger Picture
This is what happens when interest rates stay elevated long enough for stablecoin reserve yield to become genuinely meaningful. At scale, even a difference of 10 to 20 basis points in how reserve income is distributed represents tens of millions of dollars per year for major distribution partners. That is real money. That changes incentives.
Open USD is not the only competitor circling. PayPal has PYUSD. Tether dominates offshore markets. And now the regulatory environment in the US is finally maturing, which means more institutional players are about to enter with their own stablecoin products.
What To Watch
Track USDC supply on Coinbase-native products over the next two quarters. If Open USD integration accelerates on Coinbase's platform while USDC share stagnates, Circle's negotiating position weakens fast. For crypto holders, the stablecoin you use is increasingly a political and economic choice, not just a technical one. The yield wars are here.