A new US rule wiped $5B off Circle — but it may hurt Coinbase more

Circle, the issuer of USD Coin (USDC), experienced a 20% stock plunge, wiping out $5 billion in market cap, triggered by leaked drafts of the CLARITY Act which proposes banning passive stablecoin yield—rewards for simply holding the token.

Market analysts argue the sell-off is an overreaction, as Circle's revenue primarily comes from interest earned on its reserves (invested in US Treasurys), not from passing yield directly to users. Therefore, rules targeting yield pass-through might impact distributors like Coinbase, which offers yield on USDC balances, more severely than Circle itself.

Despite the regulatory uncertainty and other pressures, such as Tether pursuing a 'Big Four' audit and Circle freezing certain wallets, USDC's underlying metrics remain strong, with circulation increasing and adoption widening beyond passive yield. Investment firms like Ark Invest bought shares during the dip, and analysts maintain positive ratings, projecting significant future growth for Circle.

(Source：CryptoSlate)