Circle Internet Corp. (CRCL) shares plummeted 5.37% during intraday trading on Tuesday, marking a sharp reversal from recent gains driven by regulatory optimism for stablecoins.
The decline follows pushback from major U.S. banking groups against the latest language in the CLARITY Act regarding stablecoin rewards. Banking associations including the American Bankers Association and Bank Policy Institute argued that the proposed provisions still allow incentives that could pull deposits from traditional banks, warning that such rewards could replicate deposit-like returns despite a proposed ban on yield.
This regulatory challenge dampens earlier enthusiasm sparked by a weekend compromise on the same legislation, which had preserved stablecoin reward programs under certain conditions and previously sent Circle's stock soaring. The banking sector's opposition introduces renewed uncertainty about the final regulatory framework for digital assets, potentially affecting Circle's business model as a leading stablecoin issuer.
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