A new US rule wiped $5B off Circle — but it may hurt Coinbase more

Circle, the issuer of USD Coin (USDC) stablecoin, saw its stock plunge 20% this week, erasing $5 billion in market capitalization in its steepest intraday drop since going public. The sell-off happened on the same day Tether announced it had secured a ‘Big Four' accounting firm to undertake a full audit of USDT. According to Mario Stefanidis of research firm Artemis, the sell-off was triggered by leaked regulatory drafts and unexpected wallet freezes, sending trading volume surging to 56.4 million shares. This is nearly four times the stock's 90-day average. Yet, as the dust settles, a growing chorus of market analysts and institutional investors is calling the market’s reaction a severe miscalculation, arguing that the underlying fundamentals for the USDC issuer have never been stronger. Circle's CRCL stock has posted a modest 3% recovery to $104 as of today's market open. Related Reading Circle makes Wall Street debut as first major stablecoin issuer on NYSE Circle's alignment with global regulatory standards positions it as a trusted stablecoin partner for traditional firms. Jun 5, 2025 · Oluwapelumi Adejumo CLARITY Act yield rules hit a market already priced for little disappointment The immediate catalyst was the reported arrival of new draft language for the highly anticipated CLARITY Act, which would ban passive stablecoin yield. This means stablecoin users would be unable to earn rewards for simply holding a dollar-pegged token. At the same time, exchanges and affiliated firms would be barred from offering yield, directly or indirectly, on stablecoin balances or through structures deemed economically equivalent to interest. According to reports, activity-linked incentives would still appear to survive under the proposal, with US financial regulators, including the SEC and the US Treasury, given time to define the regulations. The new text landed after a strong rally in Circle shares. The stock had climbed 170% from its February lows and had risen from $50...