The Card Networks Are Going Back to Co-ops

Why would the two largest card networks build a stablecoin they don't control?

Visa and Mastercard each have the infrastructure, the regulatory relationships, and the distribution to issue their own dollar-backed token. Circle proved the model works. Tether proved the economics are spectacular: $10 billion in profit in 2025, mostly from sitting on U.S. Treasuries. Banks have already started building their own stablecoin consortiums rather than depend on either one.

But Visa and Mastercard didn't build their own stablecoin. They took equal founding stakes in Open Standard alongside Coinbase, Stripe, and Shopify, committed over $1 billion in liquidity, and agreed to distribute the majority of the company's equity to partners over the next four to five years. The CEO, Zach Abrams, said the "overwhelming majority" of equity will flow to partners proportional to the OUSD supply and activity they drive.

I see three possible explanations for why the card networks chose a structure that dilutes their own ownership. Only one of them is new.

The model they already tested

Visa was a member-owned association from 1970 until its IPO on March 19, 2008, the largest in U.S. history at $17.9 billion. Mastercard went public in May 2006, raising $2.4 billion. For the three decades before that, both networks were cooperatives owned by the banks that issued their cards.

The cooperative model worked because it solved a distribution problem. A single company asking thousands of banks to carry its card has to negotiate each relationship individually. A cooperative where every issuing bank holds equity aligns incentives by default. The bank promotes a network it partially owns, not a competitor's product.

That alignment broke when the networks went public. Post-IPO, Visa and Mastercard answer to shareholders, not member banks. Interchange fee disputes, antitrust lawsuits, and the slow creep of network fees all trace back to the moment the networks stopped being owned by the institutions that distribute them.

Open Standard is the cooperative model applied to digital money. Five founding partners with equal stakes, 200-plus distribution partners who earn equity by driving adoption, and a governance structure that distributes ownership rather than concentrating it.

Why the yield model breaks for distribution

Circle made $2.7 billion in revenue in 2025. About 96% of that came from reserve interest, earned on the $75 billion in assets backing USDC. Tether made $10 billion, largely from $122 billion in U.S. Treasury holdings.

Both companies capture yield on reserves that exist because other people hold their token. The issuer earns interest, the holder earns nothing or close to it, and the bank or fintech that distributes the stablecoin to its customers earns nothing at all.

This is the distribution problem. If you're a bank considering whether to integrate USDC into your payment flows, the economics are simple: Circle earns 3.5% on every dollar your customers hold. You earn whatever Circle decides to share through partnership agreements.

OUSD inverts this. Open Standard generates revenue from transaction fees, not reserve yield. Partners who distribute OUSD earn equity in the company proportional to the supply and activity they generate. A bank that drives $500 million in OUSD circulation isn't enriching a third party's balance sheet. It's building an ownership stake in the network.

The difference is structural, not cosmetic. Circle's model works when distribution is concentrated among a few large partners who can negotiate favorable revenue shares. It struggles when you need 200 banks and fintechs to each make OUSD their default. The cooperative model gives every distributor the same incentive regardless of size.

How the reserve architecture works

OUSD reserves are held across three custodians: BlackRock, BNY Mellon, and Lead Bank. Monthly attestations are published through Bridge's reserves platform.

Bridge, the stablecoin infrastructure company Stripe acquired for $1.1 billion in 2024, handles issuance and redemption. Businesses can mint and redeem OUSD at 1:1 against the dollar with no fee through four channels: BVNK (owned by Mastercard), Stripe, the Visa Stablecoin Platform, and Coinbase.

The token runs on four blockchains: Base, Ethereum, Solana, and Tempo. Each founding partner has a distribution channel that connects to at least one of those chains. Coinbase owns Base. Stripe owns Bridge, which built Tempo. Visa and Mastercard connect through their respective stablecoin platforms.

Three custodians, four chains, four minting channels, five founding partners. The architecture is deliberately distributed, but the issuance layer is not. Bridge is the single issuer. Stripe owns Bridge.

That concentration is worth watching. In the cooperative model, the issuer is supposed to be a utility, not a profit center. Stripe's $1.1 billion acquisition of Bridge was a bet on stablecoin infrastructure. Whether Bridge operates as an open utility or a Stripe advantage will determine whether the cooperative model holds.

What breaks cooperatives

The Visa and Mastercard precedent is instructive in both directions. The cooperative model scaled card payments from a niche product to a global network. It also ended.

Two forces killed the cooperative structure. First, antitrust pressure. As member-owned associations controlled by competing banks, Visa and Mastercard faced legal challenges that a public company could navigate more easily.

Second, misaligned incentives at scale. When the network is small, every member benefits from growing it. When the network is dominant, members start competing with each other for the same customers, and the cooperative governance becomes a friction point rather than an advantage.

Open Standard faces the same trajectory compressed into a shorter timeline. Mastercard and Visa are founding partners, but they're also competitors. Stripe processes payments for merchants who accept Visa and Mastercard. Coinbase operates a cryptocurrency exchange that competes with traditional payment rails. Shopify is both a Stripe customer and a distribution partner.

Launching OUSD is the easy part. Governing a shared financial network once it reaches the scale where governance decisions have real economic consequences, with five companies whose interests overlap and compete, is the part that killed the original cooperatives.

Visa's cooperative lasted 38 years. Open Standard's equity distribution timeline is four to five years. The experiment will play out much faster.