Circle selloff may be overdone as crypto bill weakens Coinbase edge, say analysts

The latest draft of the CLARITY Act hit both stocks, but one analyst says the bill could ultimately shift bargaining power toward Circle and away from Coinbase.

What to know:

Circle’s stock plunged 20% Tuesday after the CLARITY Act’s stance on stablecoin yield, but analysts argue the new rules may ultimately shift economic power toward the company as a regulated issuer.

Because Coinbase currently captures a large share of USDC interest income through its distribution deal with Circle, limits on yield-like rewards could erode Coinbase’s high-margin stablecoin revenue and strengthen Circle’s hand in their 2026 renegotiation.

Some investors see the selloff in Circle as overdone, noting that stablecoin demand is driven more by payments and settlement utility than yield, and projecting that regulation and market growth could support a Circle valuation of around $75 billion.