It’s been one year since President Trump signed the GENIUS Act into law, but the promised stablecoin explosion is so far yet to emerge for the payments industry.
Will a new coin backed by 140 financial industry heavyweights launching later this year help to kickstart the trend?
Open USD will launch in the coming months and its backers have promised it will plug gaps in the market and help to enliven the much-vaunted sector.
Stablecoins remain the great white hope of crypto payments, with predictions that it will account for tens of trillions in payment flows by the end of the decade.
The U.S. adoption of the GENIUS Act introduced a much-needed framework to stablecoins, many of which are pegged to the US dollar.
However, a year later, it has yet to propel the sector to massive payments growth, as some had hoped.
Research by the Federal Reserve Bank of Kansas City in April found that payments still account for only 0.7 percent of stablecoin usage, with transfers coming in at just below 30 percent.
While that does still represent growth over the past year, the sector still clearly has a long way to go in order to realise the bold predictions of its importance to the payments industry.
Stablecoins are predominantly used for their stored value, as with much of the rest of the crypto market, researchers said.
Open USD is hoping to change that. It will launch with an impressive list of backers, who have pledged to sign up to and use the stablecoin.
These include card giants VISA, Mastercard and American Express, as well as other financial heavyweights like Klarna, BlackRock and a string of international banks.
The group says that the digital currency will address business concerns around the prohibitive costs to mint and redeem stablecoins.
Open USD says it allows businesses to mint and redeem its coins at no cost with no artificial limits on volume.
The coin will be operated by a group called Open Standard, which says its decisions will be governed by a board made up of representatives from the likes of VISA, Mastercard and the stablecoin’s other partners.
“Existing stablecoins have great strengths, but to use them at scale, businesses need something that’s open, low-cost, high-throughput, broadly accessible, and aligned to their interests,” said Zach Abrams, the CEO of Open Standard.
“We’re thrilled to bring together over 140 businesses to launch Open USD. It’s a stablecoin built for the internet economy, designed by the businesses growing it,” he said.
Jack Forestell, the chief product and strategy officer at VISA, said the card network was bringing
“the same discipline, risk standards, and operational rigor we apply to our global network to Open USD, helping build the trust layer that allows stablecoins to operate confidently within the broader financial system”.
Fans of the Open USD project say that it is considerably more business friendly than other stablecoins, arguing that the heavy involvement of the key players in digital commerce will guide it towards success.
If the coin is not good for VISA and Mastercard, they argue, the companies will use their influence to change its policy and direction.
The long touted benefits of stablecoins continue to be present in this project. They offer a more cost-efficient method of completing international transactions and can be a faster payment rail for commercial payments.
Unlike other portions of the crypto space, stablecoins pegged to the dollar have proved to be much more stable than their un-pegged equivalents, such as Bitcoin.
While Open USD has set itself up to compete with established competitors like Tether and Circle’s USD Coin, the Open Standard group will ultimately be hoping to push stablecoin usage up considerably and in the process make it a more viable payment option for consumers and businesses.
There are also hopes that Open USD itself will be more orientated towards the needs of the payments sector.
The involvement of several key cogs in the payments ecosystem in launching the coin has commentators confident that the coin will at least structure itself in a way that works for the payments industry, even if its overall usage is hard to predict.
Some stablecoin experts have noted that Open USD also represents a potential shift in the expectations around cryptocoin issuance.
By emerging from a consortium of interests, Open USD represents a move towards building a common settlement standard backed by a broad network of institutions, rather than from a controlling entity like Circle and Tether.
Whether you think uptake of stablecoins is slow and unimpressive or building to an inevitable crescendo, there’s one thing that the launch of Open USD makes abundantly clear: stablecoins are here to stay.
Payments firms need to have a solid grasp of how to operate in the stablecoin world, but they also need the judgment not to overextend themselves in a space that is still developing.
That delicate balance of risk vs reward can be hard to manage, which is why its key to ensure that you have the right people in your organisation making the big calls and building a body of intelligence to guide your decision making.
PaymentGenes is a dedicated workforce partner for the payments industry, with its finger firmly on the pulse of the latest developments in crypto and other key fields.
If you’d like to understand more about the opportunity presented by stablecoins and what that means for your staffing, don’t hesitate to reach out.
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