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Circle shares drop 18% on US stablecoin bill concerns
Circle, the US-based issuer of the USDC stablecoin, slid as much as 18% in early US trading after a draft US stablecoin bill raised concerns it could limit rewards tied to holding stablecoins.
Coinbase fell around 8% after the draft Clarity Act raised concerns it could restrict payments deemed “economically equivalent to interest,” analysts said.
Analysts said earlier proposals such as the GENIUS Act would bar issuers from paying yield directly, while Circle earns interest on USDC reserves and shares revenue with Coinbase, which funds user rewards.
Rival stablecoin issuer Tether said it hired a Big Four accounting firm to conduct a full audit of its reserves, as Circle’s shares had rallied sharply in recent weeks.
🔗 Source: CoinDesk
🧠 Food for thought
Implications, context, and why it matters.
Coinbase’s large cut of Circle’s USDC revenue helps explain the market panic
- The sell-off follows a direct hit to a tightly linked setup. Circle issues USDC while Coinbase distributes it and collects a large share of the interest earned on USDC reserves 1.
- In 2024, Coinbase took an estimated 56% of the revenue from USDC reserve assets 1. That reliance has grown as Coinbase held about 20% of all USDC in circulation in 2024, up from 5% in 2022 2.
- Costs also run high. Circle’s distribution and transaction costs reached $461 million in the first quarter of 2025 3. Stablecoin-related revenue made up about 20% of Coinbase’s total revenue in Q3 2025 4.
Proposed stablecoin reward limits could push crypto platforms to change course
- The proposal targets a common tactic for drawing in deposits. One analyst said the limits “weaken a key part of the bull case” for stablecoins like USDC becoming a store-of-value product 5. If rewards for holding vanish, firms such as Circle may lean harder into payments or developer infrastructure for revenue 3.
- The bill could soften an edge some crypto firms use against banks. The American Bankers Association (a major US banking industry trade group) has argued stablecoin rewards could pull money from savings accounts. JPMorgan and Bank of America executives cited a Treasury study saying banks could lose up to $6.6 trillion in deposits if stablecoins offered unregulated yields 4.
- Coinbase has a lot on the line. Brian Armstrong said that if Congress bans rewards, Coinbase would keep more of its Circle revenue share. That would lift Coinbase’s stablecoin profits while users lose yield 6.
