Catenaa, Thursday, March 26, 2026- Shares of Circle Internet Group plunged more than 20% Tuesday after reports that a revised draft of the Clarity for Payment Stablecoins Act would sharply restrict how stablecoin issuers and platforms can offer yields on customer holdings.
The move threatens a core revenue stream for the company behind USDC, the second-largest U.S. dollar stablecoin.
Circle (NYSE: CRCL) closed at $101.17, down 20.1% on trading volume of 56.4 million shares, nearly three times its three-month average. Coinbase Global (COIN), a major USDC distribution partner, fell 9.76% to $181.04. The broader S&P 500 dipped 0.37% and Nasdaq Composite lost 0.84%. The stock’s one-day drop marked the largest in Circle’s history since its 2025 IPO.
The sell-off followed news of a bipartisan compromise in the Clarity Act, brokered by Sens. Thom Tillis (R‑NC) and Angela Alsobrooks (D‑MD). The draft allows activity-based rewards such as staking, trading, and transactions but bans passive yields on idle balances that function like bank deposits. Platforms including exchanges and brokers are prohibited from offering yields “directly or indirectly” on stablecoin holdings that resemble interest payments. Lawmakers said the restrictions prevent unfair competition with FDIC-insured deposits.
Circle’s USDC business model relies heavily on interest from reserves backing the stablecoin. In 2025, yields contributed 68% of the company’s $562 million revenue. Analysts project that a ban on passive yields could reduce earnings by 40–55%, shifting reliance to transaction fees and enterprise services. Coinbase, which distributes 42% of USDC volume, would face similar challenges, potentially redirecting flows to Tether or bank-issued alternatives.
The compromise resolves a two-year debate between banks and crypto advocates: banks argued yields siphon deposits and create systemic risks, while crypto groups stressed yields incentivize adoption and stabilize peg mechanisms. The Clarity Act aims to clarify federal oversight of digital assets and establish licensing, auditing, and interoperability standards.
Market reactions were widespread. CRCL’s decline pulled down crypto equities including Robinhood (‑4.2%) and Galaxy Digital (‑7.8%). USDC circulation fell 0.8% to $34.9 billion, while Tether gained 1.2% market share. Circle CEO Jeremy Allaire downplayed the immediate impact, emphasizing USDC’s utility in payments, DeFi, and remittances. Analysts maintained buy ratings, citing the clarity the draft provides despite short-term yield constraints.
Circle launched in 2013 as a Bitcoin-to-fiat gateway. USDC debuted in 2018 as a regulated U.S. dollar stablecoin. Circle raised $1.1 billion in its 2025 IPO. The Clarity Act, first introduced in 2023, stalled on yield disputes between banks and crypto firms.
The March 20 Tillis/Alsobrooks compromise allows activity-based rewards but bans passive idle-balance yields, mirroring EU MiCA 2024 rules. USDC maintains 1:1 Treasuries and cash reserves; competitors include Tether ($142B) and Ethena ($4.2B synthetic). Post-drop, Circle’s market value is $28 billion, with Q1 earnings set to test a pivot to enterprise services and transaction fees amid broader crypto market conditions.
