Circle Stock Drops 18% at One Point; US Clarity Act Draft Proposes Restricting Stablecoin Rewards

CryptoWorld reports that on Tuesday morning, USDC issuer Circle (CRCL) stock price dropped as much as 18%, and crypto platform Coinbase (COIN) fell about 8%. According to CoinDesk, the latest draft of the US Clarity Act proposes restrictions on stablecoin balance rewards, including banning rewards for passive stablecoin balances and prohibiting structures that are “economically equivalent to interest.” Mizuho analyst Dan Dolev said the draft might ban earnings solely from holding stablecoins and restrict practices that make the plan equivalent to bank deposits in any way. The report mentions that the GENIUS Act previously banned issuers from directly paying yields to users, but issuers and platforms arranged rewards through reserve asset income sharing; for example, Circle earns interest on USDC reserve assets and shares it with Coinbase, which then offers rewards to users. Keyrock digital asset researcher Amir Hajian stated that the latest Clarity Act draft, by banning arrangements “economically equivalent to interest,” points to the aforementioned “yield pass-through” model. Additionally, Tether, the issuer of USDT, announced it has hired one of the “Big Four” accounting firms to conduct a comprehensive audit of its USDT reserves. The report also notes that this decline occurred after Circle’s stock price had risen 170% since early February. Clear Street analyst Owen Lau said market reactions might be excessive; market participants are also factoring in rate hike expectations.