Circle shares fell sharply after the latest draft of the CLARITY Act targeted stablecoin yield, though analysts say the market reaction may be overdone.
The stock dropped around 20% as investors reacted to potential limits on yield-like rewards, which could reshape how stablecoin revenues are distributed across the ecosystem.
“The setup increasingly favors Circle on a relative basis,”
Said 10x Research founder, Markus Thielen.
Currently, Coinbase captures a large share of USDC economics through its distribution agreement, receiving most of the interest income on balances held on its platform and around half off-platform.
Analysts estimate Circle pays Coinbase more than $900 million annually, making stablecoin revenue a high-margin business for the exchange that could be pressured under new rules.
The regulatory shift may strengthen Circle’s position ahead of its 2026 renegotiation with Coinbase, potentially allowing the issuer to secure more favourable terms.
Bitwise CIO Matt Hougan said the selloff appears “overblown,” noting stablecoin demand is driven more by payments and settlement than yield, with projections pointing to a market size of up to $4 trillion.