Circle plunged on CLARITY Act fears, but fundamentals unchanged — Bernstein

Analysts say new US stablecoin rules may hit yield distribution, not issuers, as USDC growth in payments and trading continues to accelerate.

Circle’s shares sell-off on Tuesday may have been overdone as investors failed to see that the stablecoin issuer’s core business model remains unaffected by the proposed CLARITY Act, analysts at Bernstein said on Wednesday.

In a note to clients, Bernstein analysts Gautam Chhugani, Mahika Sapra, Sanskar Chindalia and Harsh Misra said markets are conflating “who earns yield” with “who distributes yield.”

“Circle earns. Coinbase distributes,” the analysts wrote, noting that the draft legislation primarily targets the distribution of yield to users — not the underlying reserve income earned by issuers like Circle.

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