In 2025, Wall Street gave a standing ovation to Circle. The stablecoin issuer behind USDC pulled off one of the most spectacular IPOs of the year. Listed at $31 under the ticker CRCL, the stock surged to over $83 on its first day of trading, up a phenomenal 168%. This was a meteoric success for a company whose name is inextricably linked to the tokenization of the dollar.
For Circle, this IPO felt like a coronation. After its failed SPAC merger in 2022, the company refocused on its core mission: making USDC the cornerstone of regulated finance on the blockchain.
Mission accomplished: with 78 billion tokens in circulation, a 29% market share, rigorous transparency, and reserves that are entirely backed by US Treasury bills, USDC has become the world's second-largest stablecoin, behind Tether - but the leader in terms of regulatory compliance.
CoinGlass
However, in recent months, Circle's stock has retreated, penalized first by the crypto market downturn since October, and then by renewed uncertainties last week regarding stablecoin regulation.
Is trouble brewing?
Last week's catalyst was the circulation of a draft text related to the "CLARITY Act": a compromise aimed at preventing crypto players (platforms, brokers, affiliated entities...) from offering yields on stablecoin balances, and closing down structures that "functionally" replicate bank interest.
To understand the issue, let's go back to basics: in a bank, when you deposit money, the bank doesn't let it sit idle. It can use it to lend, buy safe assets, or place it in short-term investments. In exchange for the income it earns from this money, it can pass a small portion back to you as interest. This is the principle of an interest-bearing account: you keep your money available and earn a yield without having to invest actively.
For example, in France, the Caisse des dépôts (CDC) is the body that centralizes and manages the regulated savings of French citizens. Indeed, 100% of deposits in Livret A accounts do not stay tucked away in bank vaults. "Only" 40.5% remain on bank balance sheets under strict rules: this finances their loans (housing, corporate financing), while maintaining liquidity for withdrawals. The remaining 59.5% goes to the Caisse des dépôts (CDC). Of this 59.5%, half is used for long-term loans (social housing, urban policy) and the other half for financial investments (mainly government bonds, and a portion in equities).
In terms of scale, the Caisse manages approximately €400bn of regulated French savings deposited in Livret A, LDDS, and LEP accounts.
Returning to the interest paid by banks, this is precisely what regulators want to avoid in the stablecoin universe. Because if a crypto platform tells you: "Simply hold this stablecoin with us and earn 3% or 4% per year", then from an economic standpoint, it begins to look less like a simple stablecoin and more like a quasi-savings product, very similar to an interest-bearing bank deposit.
Two nuances emerge from the US legislative text
First: this is a working draft, still subject to amendment, whose legislative path is not yet complete.
Second: the heart of the debate is not the existence of stablecoins, but the boundary between a payment stablecoin and a quasi-savings account. In other words: can one offer a stable, interest-bearing monetary product without being a bank? This question has "held hostage" the progress of the text, to the point of forcing the White House to bring banks and crypto companies together... without reaching an agreement.
In this battle, the banking argument is as follows: if stablecoins become an interest-bearing alternative to deposits, the banks' funding base - deposits - could be drained, to the detriment of credit and, potentially, financial stability. For Bank of America CEO Brian Moynihan, up to several billons of dollars in deposits could migrate to stablecoins if interest can be paid indirectly.
At its core, this debate is a war over market structure: who captures the "spread" on money? Banks, whose model consists of paying low interest on deposits and lending or investing at a higher rate, see interest-bearing stablecoins as a direct competitor - a "portable" money-market fund that can be used for payments and in crypto.
To understand why a provision targeting "yield" can rock CRCL, one must look at Circle's economic engine. First, Circle states in its financial documents: the company earns money by collecting interest and dividends on the assets held in reserve, intended to back its stablecoins.
These reserves are largely structured via a money-market fund vehicle: Circle indicates that a large portion of USDC reserves is held in the "Circle Reserve Fund". This fund is described as a government money market fund (Rule 2a-7), composed of very short-term US Treasury securities, overnight repos, and cash.
Circle.com
Today, Coinbase, via its agreement with Circle, attracts users by telling them they can earn a yield by keeping USDC on the platform, around 3.5%. The problem is that US authorities want to prevent a stablecoin from resembling an interest-bearing bank account. Therefore, if the law limits or prohibits this type of reward, USDC could become less attractive to certain users.
Why does this matter for Circle? Because the American company earns indirectly through the volume of USDC in circulation: the more USDC held by users, the larger the associated reserves, and the more these reserves can generate income, particularly with interest rates. So, if the rewards offered by platforms like Coinbase attract fewer people tomorrow, USDC growth could slow down, which would also weigh on Circle.
What the market has actually priced in: two intertwined risks
The first is a growth risk: if holding rewards become illegal or too strictly regulated, the pace of USDC expansion could decelerate, which would mechanically slow the accumulation of reserve assets and thus the revenue potential.
The second is a political risk: US regulation of digital assets is advancing, but at the cost of unstable trade-offs. The CLARITY Act officially presents itself as an attempt to establish clearer "rules of the game" (allocation of jurisdictions between the US Securities and Exchange Commission/Commodity Futures Trading Commission, investor protection, combating illicit finance, etc.). In practice, the episode regarding stablecoin yields shows that the text can also become a sectoral battlefield, where every comma redistributes rents.
Under the Donald Trump administration, the crypto file is treated as a strategic project, but it remains riddled with economic conflicts of interest (banks vs. platforms, financial stability vs. competition, "payment" vs. "disguised deposit").
As long as the boundary between a payment stablecoin and a yield product remains politically contested, Circle's valuation will also remain contested - not on the stability of USDC at one dollar, but on the trajectory of its adoption and the economics of the intermediaries that deliver it to the general public.
