The CLARITY Act, the new bill for cryptocurrencies in the USA, has caused significant fluctuations in the market, especially on stablecoin companies. The section of the bill associated with interest income on stable digital assets caused a significant decline in the shares of Circle, the largest stablecoin issuer, while the shares of cryptocurrency exchange Coinbase also declined significantly. However, experts think that the long-term effects of the bill may vary for different institutions.
How Does Revenue Sharing Work Between Circle and Coinbase?
Circle operates in the field of global financial technologies as the issuer of the US-based stablecoin USDC. Coinbase, on the other hand, is among the largest cryptocurrency exchanges in the USA and carries out an important cooperation with Circle on the distribution of USDC. In the current business model, a large portion of the interest income of users who hold their USDC balances on its platform is transferred directly to Coinbase. For assets outside the platform, this income is shared approximately equally. Markus Thielen, founder of research company 10x Research, stated that through this distribution model alone, Coinbase generates more than $900 million in revenue annually, which accounts for approximately half of Circle’s total revenues.
Thanks to this arrangement, Coinbase achieves high profitability in stablecoin revenues. However, if interest-like rewards for stablecoins like USDC are banned under the CLARITY Act, one of Coinbase’s main revenue streams could be at risk. Thielen is of the opinion that in this environment, Circle, especially with its legal compliance ability and balance sheet strength, can gain a more advantageous position in the global regulatory framework.
New Assessments from Experts on Regulation and Market Impact
Although there was a slight recovery in both companies after the sales wave caused by the CLARITY Act, the shares have suffered significant losses on a weekly basis. However, some market commentators suggest the law could spur Circle’s growth in the long run.
Bitwise Principal Investment Manager Matt Hougan thinks the extent to which Circle will be negatively impacted by the bill has been exaggerated. According to him, interest income is not the main motivation in the stablecoin market; These assets are preferred because they facilitate dollar transfers and provide access to blockchain-based finance. Hougan emphasizes that many stablecoins do not provide interest, yet their adoption is rapidly increasing.
Hougan notes that restrictions under the law could reduce the revenue Circle shares with its partners. This change can increase the profitability of the company in the long run.
In his sector growth forecasts, Hougan cites analyzes predicting that the stablecoin market could reach trillions of dollars in the next 10 years. It is stated that Circle may have significant growth potential from here if it becomes a leading player in regulatory structures.
For this reason, it is thought that the new commercial contract negotiations between Circle and Coinbase in 2026 will change the balances in the market. If federal regulations tighten, Circle is expected to receive more favorable terms in the deal.
