Bernstein: Yield Compromise in CLARITY Act Will Reinforce Circle's Competitive Advantage

Odaily Bernstein said in its latest research report that the recent yield compromise in the U.S. CLARITY Act is structurally positive for Circle and the USDC ecosystem.

According to the report, the current version of the bill prohibits stablecoin issuers from paying interest equivalent in economic effect to bank deposits to passive holders, but allows reward mechanisms tied to actual transactions, payments, and usage to continue. Bernstein believes this means Circle's current model of relying on partners like Coinbase to offer USDC reward programs will gain regulatory approval, while also limiting competitors' ability to gain market share through high-yield strategies.

Bernstein noted that the bill effectively reinforces the "payment tool" positioning of stablecoins, rather than as a "deposit substitute," which helps protect Circle's current business model based on reserve income. The firm maintains an "outperform" rating on Circle and a $190 price target.

Data shows that the total supply of global USD stablecoins has exceeded $300 billion, with USDT and USDC collectively accounting for approximately 97% of the market. Bernstein stated that USDC's share in on-chain payments and wallet transfers is steadily increasing, and in the AI agent payment protocol x402, its payment share has surpassed 99%.

Additionally, Bernstein mentioned that Circle's ARC chain has processed a cumulative 244 million testnet transactions, and the pre-sale of its ARC token previously raised $222 million from investors including a16z crypto, Apollo Funds, ARK Invest, and BlackRock.

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