Tuesday 25 March 2026 will go down in Circle Internet Group history as the worst night since its listing: CRCL shares plummeted as much as 22%, wiping out in a matter of hours much of a rally that had taken the stock from around $60 to over $130 in the space of a few weeks. Coinbase lost nearly 10 per cent, dragged down because it shares a significant portion of the revenues generated by USDC with Circle. The entire crypto sector felt the brunt: Bitcoin briefly slipped around the $69,000 mark, and Ethereum suffered in the same timeframe, in a climate of generalised risk aversion also fuelled by the macro picture such as the war in Iran, Strait of Hormuz under pressure and the Fed with its hands tied.
The detonator was the circulation of a new draft of the Clarity Act, the American crypto market structure bill currently under discussion in the Senate. The proposed text would prohibit any platform from offering returns on stablecoin balances in a manner ‘directly or indirectly equivalent’ to bank interest. The immediate reading of the market was brutal and straightforward: no more yield on USDC, no more incentive to hold it, no more competitive advantage over stablecoins that never offered yields. Circle’s business model of collecting billions in USDCs, investing them in short-term US Treasuries, collecting the interest, and turning a portion of it over to Coinbase to fund user rewards programmes would seem to have been struck to the core.
But here comes Bernstein’s counter-thesis, which is worth reading carefully because it overturns the dominant narrative. Analysts Gautam Chhugani and colleagues argue that the market has simply misread the text: ‘Circle makes money. Coinbase distributes. The Clarity Act targets distribution,’ they wrote in a note to investors. The distinction is fundamental: Circle does not pay yield directly to USDC holders. It is Coinbase, as distributor, that offers its users 3.5 per cent on USDC balances. The rule would affect Coinbase, not Circle, and even then the draft provides possible exceptions for rewards linked to real assets such as payments, trading and loyalty programmes. Bernstein maintains an Outperform rating on Circle with a $190 target, and on Coinbase with a $440 target. Clear Street’s Owen Lau called the reaction “an overreaction”, pointing out that Circle is still largely in the positive since the beginning of the year.
It must be said that there was a second factor that weighed in regardless of the Clarity Act: Tether announced on the same night that it had hired one of the Big Four for the first full audit of its reserves. For years, Circle and USDC had built their competitive advantage precisely on regulatory transparency versus Tether’s opacity. If USDT certifies with a Big Four, and in the meantime US regulation attacks USDC’s performance model, the differential narrows dramatically. The market saw this scenario and sold. Analyst Gus Gala of Monness commented that the news of the Tether audit ‘is weighing on the stock even more than the Clarity Act itself’.
USDC’s fundamentals remain strong, however: it added 4.5 billion of new supply in 2026, controls 64% of transaction volumes in stablecoins, and has over 600,000 active wallets, up 600% in one year. The peg to the dollar has not wavered one cent. It is not Earth-Moon, it is not a solvency collapse: it is a problem of perception of the business model at a time of maximum regulatory uncertainty.
The real problem, after all, is that the market did not read the Clarity Act: it heard the word ‘ban’ next to the word ‘yield’ and pressed the sell button. Bernstein is technically right, but in trading the narrative always moves faster than the analysis. And when regulatory panic meets a stock that had gained 170% in six weeks, physics does the rest.
