TLDR
- Circle Internet Group (CRCL) stock fell around 20% Tuesday after details emerged about proposed stablecoin legislation
- The revised Clarity Act would ban platforms from offering yield on stablecoin holdings if it resembles a bank deposit
- Coinbase (COIN) — Circle’s distribution partner — dropped over 10% on the same news
- The bill would allow “activity-based rewards” tied to loyalty or promotions, but not anything equivalent to interest
- The SEC, CFTC, and Treasury would have one year to jointly define what rewards are permissible
Circle Internet Group fell hard Tuesday after details of a revised Senate crypto bill rattled investors. The proposed legislation would effectively ban stablecoin yield — a feature that has become a key selling point for USDC holders.
The bill in question is the Clarity Act. A version circulated to members of the Blockchain Association would prohibit platforms from offering yield “directly or indirectly” for holding a stablecoin, or in any way that functions like a bank deposit.
The restriction would apply broadly — covering exchanges, brokers, and their affiliates. The language bars anything “economically or functionally equivalent” to interest, which leaves little room for creative workarounds.
Circle is the issuer of USDC, the second-largest stablecoin by market circulation. The company generates revenue from reserves backing USDC, held primarily in Treasury bonds and reverse repurchase agreements.
CRCL stock was down around 20% on Tuesday. The stock has only been publicly traded since earlier this year, making this one of its sharpest single-day moves.
Coinbase Also Hit
Coinbase (COIN) dropped over 10% Tuesday. That’s not surprising — Coinbase and Circle split the revenue generated from USDC reserves, and Coinbase currently offers customers a 3.5% yield on their USDC holdings.
If that yield product is banned, it removes one of the clearest reasons for retail users to hold USDC over competing stablecoins or simply keeping cash elsewhere.
Coinbase CEO Brian Armstrong had previously pulled his support for an earlier version of the Clarity Act when a yield ban was floated with backing from bank executives. That tension hasn’t gone away.
What the Bill Actually Allows
The proposal isn’t a total shutdown of stablecoin incentives. Activity-based rewards tied to user behaviour — loyalty programs, promotional bonuses, or subscription perks — would still be permitted, as long as they are not deemed equivalent to interest payments.
The bill would direct the SEC, CFTC, and Treasury to jointly define what counts as a permissible reward and set anti-evasion rules within one year of passage.
The Blockchain Association, which represents crypto companies including Circle, has acknowledged the carve-out but is seeking more detail on what activities would actually qualify.
The bill was authored by Sen. Angela Alsobrooks (D., Md.) and Sen. Thom Tillis (R., N.C.). Barron’s reported it had reached out to the Senate Banking Committee and the bill’s authors for comment.
The broader crypto market felt the pressure Tuesday. The sell-off in CRCL and COIN reflects how directly this legislation could hit business models built around stablecoin adoption.
As of Tuesday, Circle had not issued a public statement on the revised bill. The Blockchain Association email reviewed by Barron’s represents the clearest public window into the legislation’s current language.
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