Cathie Wood Warns Ripple-Backed OUSD May Not Challenge USDT, USDC

Cathie Wood has said Ripple-backed OpenUSD may struggle to challenge USDT and USDC, even with major corporate names behind it, because stablecoin markets depend on liquidity, trust, collateral use, and daily platform integration.

ARK Says Stablecoin Moats Are Built on Use

According to the ARK Invest CEO, stablecoins are like the monetary networks that evolve with increasing adoption by user bases, exchanges, wallets, and payment companies. She added that USDT and USDC have already established robust network effects in the crypto trading and payments space and DeFi.

In a research note, ARK Invest Director of Digital Assets Lorenzo Valente suggested that OUSD’s odds of supplanting the two biggest stablecoins are low. In his blog post “Why USDT and USDC are harder to kill than crypto Twitter thinks”, Valente also cautioned that many market participants may be overly optimistic about the power of the OUSD launch.

Open Standard, led by Stripe-owned Bridge co-founder Zach Abrams, introduced OUSD last month. The stablecoin is expected to be released later this year and aims to reduce adoption costs by eliminating issuance and redemption fees, sharing the majority of reserves with participants, and establishing independent governance.

Over 140 companies in the payments, banking, crypto, and tech sectors have been associated with the project, such as Ripple, BlackRock, Visa, Stripe, Google, Coinbase, DBS, and OKX. Some South Korean companies, such as Samsung Electronics and Shinhan Financial Group, have, however, stated they did not have an official agreement to participate in the consortium.

OUSD Faces Questions Over Liquidity and Incentives

Valente said stablecoin network effects are “not created by a long list of logos”. He said they are derived from liquidity, habit, collateral acceptance, market depth, settlement flows, integrations, and risk of causing disruption to systems that are working.

His analysis also challenged the notion that OUSD would be able to develop a new yield model for users. He said OUSD is expected to be GENIUS Act compliant, meaning it cannot directly share yield with stablecoin holders. He termed the model “reserve economics” and not paying end-users.

Valente said that Binance serves as a prime case in point that exchanges might choose not to change forks when another stablecoin has a better reserve economics. According to him, Binance has approximately $45 billion in USDT, Bybit has around $4 billion, and OKX has around $9 billion.

He explained that USDT is still connected to the trading operation of Binance because it is used as a quote asset, a collateral asset, and a unit of account by traders. If they have “reserve cash” from another stablecoin, “it would have to be balanced against the risk that it would damage a bigger trading business”, Valente said.

Circle CEO Jeremy Allaire, like ARK Invest CEO Cathie Wood, has also earlier defended USDC after OUSD was announced. He noted that USDC enjoys global liquidity, developer integrations, and regulatory compliance but doubted the viability of sending the bulk of the profits back to partners at a large scale. Allaire said that such a system could cause “starvation” of the infrastructure.

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