Circle (CRCL) shares fell as much as 18% following the release of the draft U.S. Clarity Act. Coinbase (COIN) shares dropped 8% as the proposed legislation targets stablecoin yields.
The bill aims to prohibit rewards for passively holding stablecoins. It bars any structures economically or functionally equivalent to interest payments.
This draft represents a compromise between the crypto and banking sectors. Traditional banks expressed concerns that yield-bearing stablecoins draw deposits away from regulated institutions.
The proposal permits activity-based rewards for loyalty or promotional programs. However, the ban on balance-based yields challenges the business model for Circle and Coinbase, which share revenue from USDC reserves.