A fresh draft of the CLARITY Act sent shares of Circle (CRCL) and Coinbase (COIN) lower this week, though some analysts argue the market reaction may overlook how the proposed rules could reshape their long-term relationship.
Circle led Tuesday’s selloff after new provisions targeting stablecoin yield surfaced. While both stocks edged higher on Wednesday, they remain notably below levels seen prior to the initial reports.
Markus Thielen, founder of 10x Research, believes the bill in its current form could ultimately work in Circle’s favor. In his view, the regulatory changes are more likely to pressure Coinbase’s distribution-driven revenue model than Circle’s role as a stablecoin issuer.
Under the existing arrangement, Coinbase captures a significant portion of USDC-related economics through its partnership with Circle. The exchange earns nearly all interest income on balances held on its platform, while off-platform revenue is typically split evenly. Thielen estimates that Circle pays Coinbase upwards of $900 million annually—around half of its total revenue.
This structure has made stablecoin income a highly profitable segment for Coinbase. However, any regulatory move to curb yield-like incentives on stablecoin holdings could weaken that advantage.
Thielen argues that a more defined federal framework would likely favor regulated issuers with strong compliance and scale, positioning Circle more advantageously. He also points to the companies’ next commercial renegotiation in August 2026 as a potential turning point, where Circle may be able to secure better terms.
Meanwhile, Bitwise CIO Matt Hougan sees the recent pullback in Circle shares as overdone, maintaining that the CLARITY Act does not disrupt the core investment thesis.
Hougan emphasizes that yield has never been the primary driver of stablecoin adoption. Instead, demand has been fueled by their utility in enabling fast cross-border payments, efficient settlement, and access to blockchain-based financial infrastructure. As such, limiting yield is unlikely to materially affect growth.
He also highlights forecasts suggesting the stablecoin market could expand to between $1.9 trillion and $4 trillion by the end of the decade. As one of the leading regulated issuers, Circle could benefit significantly if activity continues to migrate toward compliant, onshore platforms.
Additionally, Hougan notes that tighter rules around yield passthrough may allow Circle to retain a larger share of its revenue, potentially boosting margins over time.
Taken together, he sees a pathway for Circle to reach a valuation of around $75 billion—roughly double its current level.
“If stablecoins evolve as expected,” Hougan said, “even conservative assumptions suggest Circle remains an attractive investment.”
