- Visa Inc. unveiled the Visa Stablecoin Platform (VSP) on Thursday — a system designed to let banks, payment firms, and fintechs issue their own stablecoins, transfer them across blockchain networks, and manage the full lifecycle of stablecoin operations through a single Visa-managed platform; the VSP will initially support Open USD, the stablecoin being issued by the Open Standard industry consortium co-founded by Visa alongside BlackRock, Alphabet, and Coinbase; the platform is being rolled out to a select group of beta customers, with broader availability to follow as stablecoin regulation advances in the US following this year’s legislative breakthroughs.
- The market reaction was immediate and clear: Circle Internet Group — issuer of USDC, the world’s second-largest stablecoin — fell as much as 6% on Thursday, while Coinbase (which has a key distribution partnership with Circle) dropped as much as 4.5%; Visa shares rose nearly 2%; investors are pricing the VSP as a direct competitive threat to Circle’s core business, because the Visa platform gives financial institutions an alternative to building on USDC — they can instead issue their own stablecoins on VSP infrastructure, backed by Open USD’s near-full reserve yield sharing model, without needing Circle as an intermediary at all.
- The economics of Open USD — which VSP is designed to support and distribute — are structured as an existential competitive threat to Circle’s USDC model: Open USD eliminates minting and redemption fees and returns nearly all reserve income to distribution partners (banks, exchanges, payment firms), whereas USDC’s model retains most reserve income for Circle and Coinbase; if financial institutions adopt Open USD at scale, the stablecoin market shifts from a model where issuers capture most of the economic value to one where distributors capture it — a structural change that would compress Circle’s margins regardless of how much USDC volume it achieves.
- Visa’s move represents the payments network’s most aggressive positioning yet in the stablecoin infrastructure race: rather than simply accepting stablecoin payments (its earlier crypto integration posture), Visa is now positioning itself as the back-end infrastructure layer for institutional stablecoin issuance — a role that could generate significant transaction, settlement, and platform fees as stablecoin volumes scale toward Morningstar’s projected $1.45 trillion in circulation by 2035; the stablecoin market currently stands at over $310 billion, meaning the projected growth to 2035 implies roughly 5x expansion from current levels, and Visa is competing for the infrastructure fees on that growth rather than ceding it to crypto-native platforms.
What Happened?
Visa launched the Visa Stablecoin Platform (VSP) Thursday, a system letting financial firms issue, move, and manage stablecoins — initially anchored to Open USD, the near-zero-fee stablecoin backed by the Open Standard consortium (Visa, BlackRock, Alphabet, Coinbase). The platform is in beta. Circle shares fell 6%, Coinbase dropped 4.5%, and Visa rose 2% on the announcement. The stablecoin market currently exceeds $310 billion in total value; Morningstar projects it could reach $1.45 trillion by 2035.
Why It Matters?
Visa entering the stablecoin issuance infrastructure business is a watershed moment. Visa’s network reaches over 100 million merchant locations and billions of cardholders globally — if even a fraction of that network migrates to stablecoin rails enabled by VSP, it dwarfs the current scale of crypto-native stablecoin ecosystems. More immediately, the VSP + Open USD combination directly attacks Circle’s moat: Circle’s value proposition has been that USDC is the trusted, regulated stablecoin with institutional distribution; Visa is now offering institutions the ability to issue their own stablecoins on Visa’s own trusted rails, with economics far more favorable than the USDC revenue-sharing model. This is the stablecoin prisoner’s dilemma playing out at scale.
What’s Next?
Watch for Circle’s management response — whether the company adjusts USDC’s economics to compete with Open USD’s near-full reserve yield sharing, or whether it differentiates on regulatory clarity, global reach, or integration depth rather than economics. Also watch VSP’s beta customer announcements: if major banks are in the beta cohort, it signals institutional adoption is moving faster than the crypto market expected. Coinbase faces a particularly complex dynamic — it is simultaneously a VSP-backing member of Open Standard and a Circle distribution partner whose USDC revenue share is under threat from Open USD’s model. The resolution of that tension will likely define Coinbase’s stablecoin strategy for years.
Source: Bloomberg
