Due to the bill prepared for stablecoins in the USA, there was an unexpected decline in the shares of Circle, the company behind USDC. While the company’s shares lost nearly 18 percent of their value in the early hours of the day, the long-standing strong upward trend ended. Similarly, the shares of crypto platform Coinbase, which has a share in USDC revenues, decreased by approximately 8 percent.
Impact of the Bill and Market Reaction
It was stated that the basis of this sharp decline in the markets was the Clarity Act draft discussed in the US Congress. In its final form, the draft aims to significantly restrict the offering of returns on stablecoin balances. Analysts point out that this regulation could prevent even users who only hold stablecoins from accessing rewards or interest earnings.
Mizuho analyst Dan Dolev stated that the new bill could stop the incentive models introduced to stablecoin holders. According to Dolev, the law may also ban practices similar to deposits in banks. Thus, the disappearance of the promise of passive income reduces the attractiveness of US-based stablecoin projects for investors.
Shay Boloor, chief strategist at Futurum Equities, emphasized that these regulations undermine USDC’s potential as a true store of value.
New Competitive Dynamics and the Latest Situation in the Industry
Other regulations were also implemented in the stablecoin field. For example, although the previously implemented GENIUS Act prohibited issuer companies from offering returns directly to the user, it opened the door to transferring the income from reserves to the user through various models. While Circle was generating revenue from assets backing USDC, it was sharing a portion of this revenue with Coinbase, thus providing platform rewards.
However, the final draft of the Clarity Act aims to exclude all interest-like revenue models. Digital asset researcher Amir Hajian argued that the new regulation will prevent the revenue distribution model that increases the prevalence of stablecoins.
Hajian stated that with this regulation, the incentive mechanism that has been valid so far in the stablecoin ecosystem will be eliminated.
On the competitive front, there has been an important development. Tether, behind the USDT stablecoin, announced that it has received the services of a major auditing firm to launch a comprehensive and independent audit of its reserves. It is stated that if the audit is successful, Tether’s reliability among corporate users may increase and there may be pressure on USDC’s market share.
The wave of sales in Circle shares came after the company achieved a significant increase of up to 170 percent since February. Following this rapid rally, stocks reacted sharply to negative headlines.
Clear Street analyst Owen Lau found the decline in the market too exaggerated; He stated that the impact of headlines is greater than the actual risk.
