Citi says stablecoin rewards restrictions could slow Circle's USDC, not stop it
Citi analysts believe proposed stablecoin reward limits are a scaling setback for Circle's USDC, but not a fundamental threat.Summary
Citi analysts, led by Peter Christiansen, stated that proposed restrictions on stablecoin rewards in U.S. market structure legislation would be a setback for Circle (CRCL) but not a 'thesis killer' for its investment case. The draft bill would allow narrowly defined rewards that do not resemble bank deposit interest. While weaker incentives might temporarily reduce USDC circulation and liquidity, Citi maintains that stablecoin volume, not circulation, is the key adoption indicator. Separately, Bernstein analysts argued that the market overreacted to the draft Clarity Act, which targets yield on passive balances, potentially impacting distribution partners like Coinbase (COIN) but leaving Circle's revenue model, which relies on reserve income from backing assets, largely unaffected. USDC growth is primarily driven by trading, payments, and collateral demand, not yield.
(Source：CoinDesk)