Leaked CLARITY Act Draft Triggers 20% Slide in Circle Shares
Circle (CRCL) suffered its steepest single-day selloff since its June 2025 IPO, with the stock plunging more than 20% on March 24 after details from a new Senate draft of the CLARITY Act circulated. Investors focused on language that would curb so-called passive stablecoin yield—rewards paid simply for holding a stablecoin.
The draft would ban payouts for holding stablecoin balances and prohibit anything described as "economically equivalent to interest" on those balances. It includes a limited exception for activity-based rewards tied to loyalty programs, transactions, or platform usage, though what qualifies as "activity" is not clearly defined.
The proposed restriction is significant for Circle because yield sharing has been a key driver of USDC adoption. Coinbase currently advertises 3.5% on stablecoin holdings, and about 20% of its quarterly revenue is tied to its USDC distribution partnership with Circle. The draft language would effectively undercut that model. Coinbase shares fell about 10% the same day.
Coinbase CEO Brian Armstrong previously withdrew support for an earlier version of the Senate draft in January over yield limitations, a move that temporarily slowed the markup process. The latest draft still faces hurdles, including a late-April markup and the need to secure 60 Senate votes before it can advance.
The timing also coincided with a headline from Tether. On the day the draft leaked, Tether said it had hired a Big Four accounting firm to conduct a full audit of USDT reserves for the first time.
Fox Business journalist Eleanor Terrett noted that the yield restriction has been openly discussed for months, citing public remarks from lawmakers including Senators Thom Tillis and Angela Alsobrooks. Terrett wrote on X that it was "still surprising" to see such a sharp equity reaction given how widely the issue had been aired.
Technically, the selloff delivered another jolt to CRCL holders. The drop pushed the shares below the 20-day exponential moving average (EMA), only the second such break since the company went public. The only prior breach was followed by a roughly 52% peak-to-trough decline. If that historical pattern were to repeat, the comparable downside zone would be roughly $49 to $52, though that is a scenario reference rather than a forecast.
Before any move toward that area, CRCL faces closer support levels. The 50-day and 100-day EMAs are near $94 and $97, respectively, with $68 identified as the next major support zone below those levels. CRCL closed Monday at $126 and traded down to intraday lows near $98 on Tuesday.
Fundamentals have not disappeared from the picture. Circle reported Q4 2025 revenue of $770 million, up 77% year over year. Baird recently raised its price target to $138 and reiterated an Outperform rating. Circle is also pursuing growth outside the US, including an EU lobbying effort and an Africa expansion via a Sasai Fintech partnership.
Legislatively, the CLARITY Act remains a work in progress. Polymarket currently prices the odds of the bill being signed into law in 2026 at about 63%, leaving room for the language to be softened or revised. Until investors get more certainty, the stock is trading as though the harshest outcome is already on the table.
