The latest version of the Clarity Act is pressuring stocks as it would restrict stablecoin rewards.
Circle shares fell as much as 18%, and Coinbase dropped about 8%, after a draft of the U.S. Clarity Act raised the prospect of strict limits on stablecoin yield. The proposed legislation would bar rewards on passive stablecoin balances and ban structures "economically equivalent to interest," threatening a key incentive that has fueled USDC adoption.
The sell-off hit Circle after a 170% rally since early February and came as rival Tether moved to bolster confidence by hiring a Big Four accounting firm for a full audit of its USDT reserves. Stablecoin issuer Circle's shares tumbled on Tuesday, after a draft version of U.S. stablecoin legislation raised concerns about limits on yield. The stock of the USDC issuer fell as much as 18% in the early U.S. session, snapping a weeks-long rally that saw more than 100% gain. Meanwhile, crypto platform Coinbase , which shares revenue coming from the stablecoin, dropped about 8%."Clarity Act could potentially ban yield payments for simply holding a stablecoin and restrict any approach that makes the program in any way equivalent to a bank deposit," said Mizuho analyst Dan Dolev. Stablecoin yield — whether through onchain lending or platform incentives — has been a big part of the pitch to investors. Taking that away makes it harder for tokens like USDC to evolve beyond simple payments. "That weakens a key part of the bull case," said Shay Boloor, chief market strategist at Futurum Equities, arguing it limits USDC’s path toward becoming a true store-of-value product. The stablecoin-focused GENIUS Act banned issuers from paying yield directly to users, but they’ve built ways to pass through income earned on reserves. Circle collects interest on USDC's backing assets and shares it with Coinbase, which in turn funds rewards for users. The latest draft of the Clarity Act targets that structure by banning anything "economically equivalent to interest," effectively cutting off a key incentive for holding stablecoins, according to Amir Hajian, a digital asset researcher at KeyrockThere was another development in the background. Tether, issuer of the USDT stablecoin and main rival of Circle, said it hasto conduct a long-promised full audit of its reserves. If successful, the audit could improve USDT's image among institutional users by demonstrating stronger risk management, potentially eating into USDC's market share. The selloff comes after a strong run, during which Circle shares gained 170% since early February, far outpacing other crypto stocks and the struggling broader stock market. That setup left the stock vulnerable to a sharp pullback on any negative headlines. "The actual situation doesn’t appear to be as bad as the headline indicates," said Owen Lau, an analyst at Clear Street. "It looks like an overreaction, but the market tends to shoot first and ask questions later."Bitcoin slipped back toward $69,000 on Tuesday as a broader pullback in risk assets weighed on crypto markets. Stablecoin issuer Circle and crypto exchange Coinbase led declines among digital asset-related stocks. Increasing expectations of Federal Reserve rate hikes fueled risk-off sentiment, while bitcoin continued its recent pattern of modest Monday gains followed by small Tuesday declines.3 hours ago
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Binance Coin (BNB) Dethrones XRP to Become 4th Most Valuable CryptocurrencyBNB has reclaimed the fourth largest crypto rank with a $90.7 million lead over XRP. A 2.27% resilience move triggered a historic reshuffle in the global top five.
Read more »
Ethereum ICO Whale Breaks Two-Year Dormancy, Moves 15,000 ETH to CoinbaseEthereum whale is selling amid growing volatility concerns on the market.
Read more »
Will Binance Coin Be Overtaken by XRP? Analyzing Market Capitalization Growth PotentialBinance Coin has gained a serious advantage over XRP's placement at the market's top, but a recovery is still possible.
Read more »
Also Falling Down – Fences in Logan CircleWelcome to the beautiful life
Read more »
The Trump gold coin is not normalThe U.S. Commission of Fine Arts has voted to approve the design for a new commemorative gold coin.On one side, an eagle in flight – on the other, a portrait of President Trump, staring directly at the viewer.Federal law prohibits living people from being featured on U.S.
Read more »
Circle asks EU to ease crypto thresholds in proposed markets frameworkThe most recent news about crypto industry at Cointelegraph. Latest news about bitcoin, ethereum, blockchain, mining, cryptocurrency prices and more
Read more »