Circle Internet Group (NYSE:CRCL) plummeted 22% Tuesday after draft language from the Clarity Act reportedly bans exchanges from offering stablecoin yield, but Bernstein analysts say the market is conflating who earns yield with who distributes it.
The Bernstein Counter-Thesis
Analyst Gautam Chhugani and his Bernstein colleagues argue the market misread the risk. “Circle earns. Coinbase distributes. The Clarity Act targets distribution,” they wrote in an investor note.
The proposal would ban companies from paying users simply for holding stablecoins in a way that resembles interest on bank deposits.
However, carve-outs for activity-based rewards could still allow platforms to offer incentives linked to payments, trading, or loyalty programs.
Bernstein said the selloff “may not be calibrated enough” because rewards tied to bona fide activity may still be permitted under the draft language.
The Clarity Act Stablecoin Battle
Patrick Witt, executive director of the President’s Council of Advisors for Digital Assets, confirmed the move Friday, crediting Senators Thom Tillis …