Circle selloff may miss the mark as Clarity Act targets distributors, not issuers: Bernstein

Bernstein analysts argue that the recent sharp selloff in Circle shares, which fell about 20%, is based on a misunderstanding of proposed U.S. stablecoin rules under the Clarity Act. The research firm asserts that the proposed regulations focus on stablecoin distributors, such as platforms, rather than issuers like Circle. Specifically, the rules aim to bar platforms from offering yield on passive stablecoin balances in ways resembling bank interest, though activity-based rewards would still be permitted. Circle's model, which invests its USDC reserves into short-term U.S. Treasurys and earns the spread without paying yield directly to token holders, sits outside this restriction. Bernstein believes this distinction is crucial and that limiting distributor payouts could even strengthen Circle by reducing competitors' incentives for aggressive yield offers. The immediate impact is expected to fall on intermediaries like Coinbase, which may need to rework its rewards structure. Bernstein maintained an 'outperform' rating on both Circle and Coinbase, citing long-term upside from stablecoin adoption in payments and financial infrastructure.

(Source：The Block)