Circle Internet Group (NYSE: CRCL), a leading stablecoin issuer, closed Tuesday at $101.17, down 20.1%. The stock, which is up 27.6% year-to-date, declined after news that proposed crypto regulation might tighten limits on stablecoin yields.
Circle is the main issuer for USD Coin (USDC), the second-biggest stablecoin in circulation. It has to maintain accessible reserves to back the USDC it issues, and a large proportion of its revenues come from the yields those funds generate.
Changes in U.S. crypto regulation could have a big impact on Circle’s bottom line. Stablecoin yields have proven a sticking point for lawmakers as they negotiate further cryptocurrency industry legislation, known as the Clarity Act.
As such, today’s news that negotiators had reached a compromise that could restrict stablecoin interest caused Circle’s share price to plummet. Investor concern is understandable. However, not only is it still draft legislation, but it will also be important to see the proposed text to fully understand its impact.
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