Bernstein: Investors Misread the U.S. Clarity Act Draft; Circle's 20% Slide Looks Overdone

Circle shares sank about 20% on Tuesday as investors reacted to language in a draft of the U.S. Clarity Act that would restrict stablecoin-related yields, The Block reported. Bernstein analysts said the sell-off reflects a misunderstanding of the proposal, arguing the provision is aimed mainly at distributors rather than issuers. Bernstein noted that Circle generates reserve income by investing in short-term U.S. Treasury securities and does not directly pay yields to token holders, leaving it outside the scope of the specific restriction. The firm reiterated its Outperform ratings on Circle and Coinbase, keeping price targets at $190 and $440, respectively.