🌐** Website | **💼
Happy weekend, Stablescope readers.
This week captures two very different pressures reshaping the stablecoin market.
Recap on the two headliners this week:
SS #139 - Senate Report Ties USDT to Iran
SS #140 - Open USD Challenges Tether and Circle
On one side, USDT’s scale is becoming a geopolitical liability as well as an advantage. A Democratic staff report from the Senate Permanent Subcommittee on Investigations argues that USDT has played a major role in Iran-linked financial networks. Its analysis found that 84% of 846 sanctioned Iran-linked wallets transacted exclusively or nearly exclusively in USDT. Tether disputes the implication that it is permissive toward illicit activity, pointing to approximately $550 million of Iran-linked USDT frozen during 2026 and extensive cooperation with law enforcement. Richard Blumenthal
On the other side, Open USD (OUSD) is attacking the market from a completely different angle. Rather than trying to beat USDT or USDC purely through reserves, yield or blockchain performance, Open Standard is assembling distribution around Coinbase, Mastercard, Shopify, Stripe and Visa—and giving participating businesses economic ownership in the network they help build. OUSD is already live across Ethereum, Solana, Base and Tempo, with more than 200 participating companies. Open Standard
The common thread is important: the stablecoin race is moving beyond the token itself.
The next competitive frontier is who controls distribution, compliance, governance and the institutional relationships surrounding digital dollars.
Enjoy the read!
You read and share. We listen and improve. Send us feedback at marco@launchy.app.
The first generation of stablecoins competed primarily on liquidity. USDT won enormous distribution across exchanges, emerging markets and crypto-native settlement; USDC differentiated through institutional positioning and regulated infrastructure.
The next generation looks different.
The Senate scrutiny of USDT shows that once a stablecoin reaches systemic international scale, distribution creates responsibility. A token that functions across borders, exchanges and informal financial networks cannot separate product adoption from sanctions enforcement, AML controls and geopolitical policy. The larger the network becomes, the more regulators will treat its issuer as financial infrastructure rather than simply a technology company. The Senate report’s allegations remain allegations rather than findings of legal liability, and Tether emphasizes that it actively freezes sanctioned assets and cooperates with authorities.
OUSD illustrates the other side of the equation: distribution itself is becoming the product.
Instead of paying a distributor a simple revenue share, Open Standard allows partners to earn rewards—and potentially equity—according to the OUSD supply and transaction activity they generate. Its founding companies have committed more than $1 billion toward establishing OUSD liquidity, while the wider partner ecosystem has already exceeded 200 organizations.
This potentially changes the competitive equation from: Issuer → Stablecoin → Distributor → User
To: Issuer + Distributor + Infrastructure + Merchant → Shared Monetary Network
Major Stablecoin Issuers
🟡 Mixed
Scale remains enormously valuable, but it increasingly brings sanctions, AML and geopolitical responsibilities. New consortium models also challenge issuer-controlled economics.
Banks & Financial Institutions
🟢 Positive
Banks become increasingly important as reserve custodians, compliance partners, settlement endpoints and distributors rather than simply competitors to stablecoins.
Regulators
🟢 Positive
The Iran debate strengthens the case for treating large stablecoin networks as important financial infrastructure requiring clearer supervisory standards.
Corporates & Enterprises
🟢 Positive
OUSD increases competition among issuers for enterprise distribution, potentially lowering integration costs while expanding payment and treasury options.
Retail Users & Crypto Natives
🟡 Mixed
More competition improves accessibility, but stronger compliance infrastructure could reduce some of the permissionless characteristics associated with early stablecoins.
Developers & Protocol Founders
🟢 Positive
More credible stablecoins and distribution networks create additional programmable settlement assets and integration opportunities.
Institutional Investors & VCs
🟢 Positive
Value creation is broadening from issuers toward orchestration, compliance, payments, liquidity, treasury and distribution infrastructure.
Infrastructure & Service Providers
🟢 Strong Positive
Multi-stablecoin environments increase demand for routing, interoperability, identity, compliance, liquidity and treasury infrastructure.
DAOs & Governance Communities
🟡 Mixed
Greater institutionalization improves liquidity but shifts governance influence toward regulated corporate networks and issuers.
USDT demonstrates the enormous power of liquidity. With a market capitalization above $180 billion, its utility comes partly from the simple fact that counterparties around the world already accept it.
But liquidity has a second-order effect: the larger the network becomes, the harder it is for the issuer to remain politically neutral infrastructure.
The Senate report illustrates this tension. Investigators argue that USDT became heavily used within Iran-linked financial networks; Tether counters that the programmability and traceability of stablecoins allow it to freeze assets in coordination with authorities. Both arguments point toward the same structural reality: stablecoin issuers increasingly possess capabilities—and therefore responsibilities—that resemble financial infrastructure operators.
OUSD is approaching the moat from the opposite direction.
Its innovation is less about another dollar token than who economically benefits when that token grows. Open Standard’s partners can earn rewards according to supply and activity and potentially earn equity through distribution. Meanwhile, OUSD is already integrated across Stripe’s stablecoin stack, including Treasury, Issuing, Global Payouts, Payments and Crypto Onramp.
That creates a potentially powerful flywheel:
Distribution → Transactions → Partner Economics → More Distribution → Greater Liquidity
The implication is that future stablecoin competition may happen above the blockchain layer. Ethereum versus Solana matters less when the same asset exists across both. What matters increasingly is whether the stablecoin is already embedded inside the wallet, card network, merchant stack, treasury platform or settlement API an institution uses.
OUSD therefore does not need to immediately displace USDT or USDC to matter. It needs to prove that distribution ownership can manufacture liquidity.
If that works, stablecoin issuers may eventually look less like standalone token companies and more like financial networks competing for embedded distribution.
The Iran-USDT controversy is fundamentally a question about financial infrastructure, not crypto speculation. It concerns sanctions, correspondent alternatives, cross-border dollar access and who bears responsibility when digital dollars move through prohibited financial networks.
OUSD tells the same story from the commercial side. Coinbase, Mastercard, Shopify, Stripe and Visa are not building around OUSD because consumers need another token ticker. They are positioning around the possibility that stablecoins become an underlying settlement mechanism for payments and financial services.
That distinction will become increasingly important. Consumers may eventually pay with a Visa card, receive money through Stripe, trade through Coinbase or purchase from Shopify without knowing which stablecoin settled underneath.
In that world, the most important question is no longer: **“Which stablecoin has the highest market cap?” **It becomes: “Which monetary network is embedded across the most trusted financial distribution?”
Stablecoins increasingly resemble programmable settlement infrastructure—and the battle is shifting from crypto exchanges toward banks, payment processors, merchants, wallets and enterprise treasury systems.
**Compliance responsibility remains unresolved.**The Senate report raises an important question: how proactively should issuers identify and freeze suspicious wallets before receiving formal government instructions? Tether emphasizes that it cooperates extensively with law enforcement, while Senate investigators argue that it should have acted earlier against publicly identifiable illicit activity.**Stablecoin geopolitics will intensify.**Dollar stablecoins simultaneously extend dollar accessibility and create alternative channels around traditional banking controls. Governments are therefore likely to treat major issuers increasingly as part of sanctions and national-security infrastructure.**OUSD still needs to prove organic demand.**A powerful founding network does not automatically create sustainable circulation. The critical indicators will be transaction velocity, external holders, merchant usage and recurring settlement activity—not headline supply alone.**Incentives can distort adoption.**Rewarding partners based partly on supply and activity creates strong alignment, but also requires safeguards against economically artificial volume. Open Standard has disclosed the broad mechanism but not all thresholds governing equity allocation.**Multi-stablecoin fragmentation could accelerate.**If banks, payment networks and technology platforms increasingly launch or sponsor their own digital dollars, institutions may face fragmented liquidity across many otherwise similar USD instruments. Interoperability and routing could consequently become more valuable than issuance itself.Governance may become the ultimate differentiator.The next institutional question is not simply whether reserves are fully backed. Institutions will increasingly askwho controls the issuer, who can freeze assets, how compliance decisions are made, who captures reserve economics and who has influence when the network becomes systemically important.
Onigiri Capital (onigiri.vc), a US$50 million blockchain-focused investment fund, launched by Saison Capital, the venture arm of Japan’s Credit Saison. Onigiri Capital is on a mission to chart the next chapter of finance and invest in seed and Series A blockchain startups in stablecoins, payments, RWAs, DeFi and financial infrastructure. The fund’s strategy emphasizes connecting startups to Asia’s growing digital asset markets.
If you’d like to discuss or contribute to the next Institutional Lens, contact us at hi@onigiri.vc
Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.
