Open USD Hits EU Roadblock: Not Listed in Crucial Register

Open USD, a dollar stablecoin backed by Coinbase, Mastercard, Shopify, Stripe, and Visa, has been live since September 30. The token is issued by Bridge, a subsidiary of Stripe's stablecoin issuer, and is pegged to the US dollar at $0.9995 on October 1. Despite being launched with great fanfare, Open USD is not listed in the EU register, which poses significant challenges for its adoption in Europe.

The MiCA regulation requires that an e-money token be notified and published by the issuer in the EU register before it can be offered publicly or admitted to trading. Bridge, the issuer of Open USD, is authorized as an electronic money institution but has only notified a euro token with the ticker EURR in the register. No white paper for Open USD was entered, leaving its status uncertain.

The distinction between an authorized issuer and an authorized token is crucial here. An authorized issuer can issue multiple tokens, each requiring separate notification and publication of a white paper. The absence of Open USD's white paper from the register means that it cannot be traded on exchanges regulated in the EU without violating MiCA regulations.

The reserves backing OUSD are held by BlackRock, Lead Bank, and BNY, with monthly attestations provided to confirm their presence. However, this is not as robust as the standard required under MiCA for euro stablecoins, which demands full separate holding of value from issuer assets and redemption at par.

Under Article 50 of MiCA, holders of Open USD will not be entitled to interest on their holdings; instead, the yield will go to participating merchants measured by circulation and other factors. This unusual economics is touted as an advantage but raises questions about the stability of the token.