Jefferies Advises Caution on Circle Amid Emerging Competition from Open USD

“Large groups of companies often coordinate poorly, have misaligned incentives, slow progress, and rarely foster genuine, durable innovation,” he wrote.

Evaluation of the Consortium Model

This skepticism is shared by Lorenzo Valente, director of digital asset research at ARK Invest, who observed that the cryptocurrency space has experienced multiple consortium‑backed stablecoin initiatives in recent years, such as Meta’s Diem project and Paxos’s Global Dollar Network.

“Each year a consortium‑style stablecoin initiative emerges,” Valente wrote on X. “Although the participants are undoubtedly influential, I remain highly doubtful that any of these projects will achieve significant scale.”

He noted that Open Standard’s greatest challenge may involve coordinating more than 140 participants with divergent interests.

“A consortium of hundreds of rivals has no precedent for functioning,” he said. “Decision‑making among competitors will inevitably be glacial.”

Valente compared the model to decentralized autonomous organizations (DAOs), whose governance frameworks frequently encounter delays in decision‑making.

“‘Owned by everyone’ typically translates to accountability to no one,” he said. “I would wager on the two operators capable of shipping unilaterally rather than a committee that must seek permission from hundreds of rivals.”

He also questioned whether major banks, payment networks, and technology firms would stay committed if regulatory pressure mounts. Circle and Tether have spent years establishing global regulatory infrastructure and licensing, whereas a consortium may struggle to remain aligned under more demanding conditions.

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