Circle‘s shares stabilized around $102.50 on Wednesday, clawing back some ground after a sharp decline earlier in the week, according to Yahoo Finance. The stock briefly climbed to $110 shortly after markets opened before retreating. The partial recovery followed a turbulent Tuesday that sent shares down roughly 22% on the week.
The sell-off was triggered in part by proposed changes to market structure legislation being discussed on Capitol Hill. Under the latest text of the Clarity Act, platforms such as Coinbase would be prohibited from offering holders of USDC deposit-like rewards. Community banking organizations had raised concerns about potential outflows tied to such yield arrangements, prompting crypto lobbyists to seek a compromise with the banking industry.
Adding to the pressure, Circle’s chief competitor Tether announced it is working toward a full audit with an unnamed firm from the Big Four accounting sector. Analysts at Clear Street noted that the disclosure fueled speculation Tether may be preparing to expand its market-leading USDT stablecoin into the United States, which could weigh on Circle’s competitive position.
Clear Street analysts, led by Owen Lau, pushed back against the severity of the market reaction in a Wednesday note. They argued that near-term revenue expectations may need adjustment but that the broader strategic case for USDC remains solid. The group reiterated a price target of $152 and a “Buy” rating, citing tailwinds including tokenization, AI-native payments, prediction markets, and institutional adoption of regulated payment infrastructure.
The analysts also highlighted that the Office of the Comptroller of the Currency, the country’s primary banking regulator, had already proposed rules barring stablecoins from offering interest-like payments before the Clarity Act headlines emerged. They added that a yield pass-through model was already under strain prior to Tuesday’s developments. On the question of Tether’s audit progress, the analysts said it remains difficult to envision investors ranking USDT above USDC on regulatory grounds, even if the El Salvador-based firm raises its compliance standards.
Analysts at Bernstein also weighed in on Wednesday, cautioning that some investors may be misreading the implications of the yield restrictions for Circle specifically. They clarified that Circle does not pay yield directly to USDC holders, and that the proposed ban targets platforms distributing yield to end-users rather than issuers earning returns on reserves. Bernstein reiterated “Outperform” ratings for both Circle and Coinbase, with respective price targets of $190 and $440.
Cathie Wood‘s Ark Invest appeared to share a similarly constructive view, purchasing approximately 161,000 Circle shares across several exchange-traded funds on Tuesday, according to Ark Invest Tracker. The purchase was valued at around $16.5 million as of Wednesday. Coinbase CEO Brian Armstrong has previously stated that a ban on deposit-like stablecoin rewards could actually improve Coinbase’s profitability, since the exchange currently passes most of its USDC reserve revenue back to users. Despite that framing, Coinbase shares have fallen roughly 10% on the week to approximately $181, with Bernstein analysts suggesting the company would likely seek alternative approaches under any new restrictions and navigate a transitional period in its rewards model.
Originally reported by Decrypt.
