Bernstein: CLARITY Act Yield Concession Clause Will Strengthen Circle's Competitive Advantage

Odaily Planet Daily News Bernstein stated in its latest research report that the recently reached stablecoin yield compromise under the US CLARITY Act is structurally beneficial for Circle and the USDC ecosystem.

The report states that the current version of the bill prohibits stablecoin issuers from paying interest to passive holders that is "economically equivalent" to bank deposits, but allows reward mechanisms related to actual transactions, payments, and usage to continue. Bernstein believes this means Circle's current model of relying on partners like Coinbase to provide USDC reward programs will gain regulatory recognition, while also limiting the industry's room to compete for market share through high yields.

Bernstein points out that the bill effectively strengthens the stablecoin's positioning as a "payment tool" rather than a "deposit substitute," helping to protect Circle's current business model that relies on reserve income. It continues to give Circle an "Outperform" rating and a $190 price target.

Data shows that the total global supply of dollar-denominated stablecoins has exceeded $300 billion, with USDT and USDC together accounting for approximately 97% of the market share. Bernstein states that USDC's share in on-chain payments and wallet transfers is continuously increasing, and its payment share in the AI Agent payment protocol x402 has exceeded 99%.

Additionally, Bernstein mentioned that Circle's ARC chain has processed a cumulative total of 244 million testnet transactions. Its ARC token presale previously raised $222 million, with investors including a16z crypto, Apollo Funds, ARK Invest, and BlackRock.

However, the report also notes that the CLARITY Act still needs to complete multiple legislative procedures before it takes effect, including a 60-vote threshold in the full Senate and coordination with the House version. Polymarket currently estimates its probability of passing in 2026 at around 62%. (The Block)