Overview
- An updated draft of the CLARITY Act, reported Tuesday, would bar passive yield on stablecoins by prohibiting anything described as “economically equivalent to interest.”
- Circle shares fell about 18%–22% Tuesday and Coinbase dropped roughly 8%–11%, then Circle rebounded as much as 7% Wednesday after ARK Invest disclosed buying more than 160,000 shares.
- The restriction targets the pass-through model where Circle earns interest on USDC reserves and shares revenue with Coinbase to fund user rewards, removing a key reason to keep large USDC balances.
- The text reviewed by industry participants appears to permit activity- or transaction-linked perks, and regulators such as the SEC, CFTC, and Treasury would later define the specifics if the bill advances.
- Tether said Tuesday it hired a Big Four auditor for a full reserves audit, intensifying pressure on Circle as lawmakers, the White House, banks, and crypto firms continue negotiations that ran March 23–24 and analysts debate whether the selloff is an overreaction or a lasting reset.