Citigroup: Stablecoin Reward Restrictions May Hinder USDC Expansion, But Do Not Alter Circle's Fundamentals

Odaily News Citigroup stated that the proposed restrictions on stablecoin reward mechanisms in the U.S. "CLARITY Act" draft may pose a temporary headwind for Circle (CRCL), but will not shake its long-term investment thesis. Analysts pointed out that the policy is more likely to affect the pace of scale expansion rather than pose a fundamental threat. The bill intends to restrict stablecoin yields similar to deposit interest, but allows incentive mechanisms related to transactions or payments. Since Circle itself does not directly pay yields to USDC holders but distributes reserve earnings to channel partners like Coinbase, its core revenue model will not be directly impacted.

Citigroup believes that reduced rewards may weaken short-term user motivation to hold USDC, thereby affecting circulation scale and secondary market liquidity. However, the key metrics for stablecoin adoption remain transaction and payment volume, not circulation volume itself.

Previously, affected by policy uncertainty, Circle's stock price once fell by approximately 20%. However, institutions including Bernstein believe the market may have misinterpreted the policy's impact, as the regulatory focus is on restricting platforms that distribute earnings to users (like Coinbase), not Circle's reserve earnings model. (CoinDesk)