Circle's stock price once fell by 18%, and the U.S. Clarity Act draft aims to limit stablecoin rewards

On Tuesday morning, US stocks saw the issuer of USDC, Circle (CRCL), drop by as much as 18%, while the crypto platform Coinbase (COIN) fell by about 8%. CoinDesk reported that the latest draft of the U.S. Clarity Act aims to restrict rewards on stablecoin balances, including prohibiting rewards for passive stablecoin balances and banning structures that are "economically equivalent to interest."

Mizuho analyst Dan Dolev stated that the draft may prohibit payments of earnings solely for holding stablecoins and limit any practices that make the program equivalent to bank deposits in any way. The report mentioned that the GENIUS Act previously prohibited issuers from directly paying earnings to users, but issuers and platforms arranged rewards through methods such as distributing earnings from reserve assets; among them, Circle earns interest on the assets backing USDC and shares it with Coinbase, which uses this to provide rewards to users.

Keyrock digital asset researcher Amir Hajian noted that the latest draft of the Clarity Act points to the aforementioned "earnings penetration" model by prohibiting arrangements that are "economically equivalent to interest." Additionally, USDT issuer Tether announced that it has hired one of the "Big Four" accounting firms to conduct a comprehensive audit of its USDT reserves. The report also pointed out that this drop occurred after Circle's stock price had risen by 170% since early February, with Clear Street analyst Owen Lau suggesting that the market reaction may be excessive; market participants are also factoring in expectations of interest rate hikes.