Circle Internet Group closed down 6.92% at $66.16 on Wednesday, the same session in which seven Senate Democrats said the CLARITY Act text “falls “short”—leaving the stock roughly 45% below the level it reached when the bill’s stablecoin compromise was struck in May.
The Rally That Has Fully Unwound
On May 4, Circle closed up 19.9% at $119.53 after Senators Thom Tillis and Angela Alsobrooks released a bipartisan compromise resolving the CLARITY Act’s stablecoin yield question. The deal banned passive, deposit-style yield while preserving rewards tied to user activity—the outcome Circle needed.
The move was broad and heavily traded, with 32.6 million shares changing hands against an average near 9.6 million. Coinbase rose 6.1% the same day, and prediction market odds on the bill becoming law in 2026 jumped roughly 15 percentage points to 61%.
According to Google Finance, Circle now trades below even that session’s intraday low of $103.90. From Wednesday’s close, the decline from the May 4 peak is 44.6%.
Why the Bill Moves the Stock
The sensitivity is structural. More than 95% of Circle’s revenue comes from interest income on the reserves backing USDC, which makes any legislative language touching stablecoin yield an existential question for the business model rather than a regulatory detail.
The stock has moved violently in both directions on that language. An earlier March draft that would have restricted yield more broadly sent shares down 20% in a single session. The May compromise reversed it almost exactly.
In practical terms, Circle has become a derivative on the CLARITY Act—an equity whose price reflects the perceived probability of a specific provision surviving a specific legislative process, rather than quarter-to-quarter operating performance.
The Provision Circle Won Is Being Relitigated
The compromise that produced May’s rally is no longer settled. On July 13, a coalition of 78 banking organizations—the American Bankers Association, the Independent Community Bankers of America, and 76 state banking associations—wrote to Senate leadership seeking revisions to Section 404, the provision governing stablecoin yield and rewards.
The banks want the activity-based rewards carve-out narrowed substantially, arguing the current language allows platforms to offer interest-equivalent returns that circumvent the framework the GENIUS Act established. Their objection is about deposit flight: US banks fund roughly 80% of their lending through customer deposits.
Everything Else Has Gone Against It Too
The legislative stall has compounded rather than caused Circle’s decline.
The heaviest blow came from competition. Circle fell 16% on July 1 when a coalition of more than 140 companies, including Visa, Mastercard, and BlackRock, unveiled Open USD, a rival dollar stablecoin. The same week, Circle was removed from five Russell growth indexes.
Regulatory wins have not offset it. Circle received final OCC approval on July 10 to establish a national trust bank, bringing USDC custody under federal supervision—a milestone that lifted shares only briefly before the gain faded. Analysts have since moved against the stock: Mizuho downgraded Circle to Underperform on July 14, asking whether Open USD is “Circle’s cryptonite,” and Baird cut its price target to $100 from $138.
Not everyone is selling. ARK Invest bought 220,012 shares across three ETFs on July 14, worth roughly $13.9 million, extending one of its most persistent accumulation campaigns of the year.
The Whipsaw Continues
The volatility has not stopped with the Democrats’ statement. Treasury Secretary Scott Bessent said this week that the CLARITY Act is on the Senate’s “one-yard line,” a comment that lifted crypto equities.
That is the pattern in miniature: a stock swinging on the rhetorical temperature of a negotiation whose outcome remains genuinely undecided. Seven Democrats—including Alsobrooks, who co-authored the compromise that produced May’s rally, and Ruben Gallego—said the Republican-proposed text falls short on ethics, consumer protection, illicit finance, conflicts of interest, and market integrity, while committing to keep working toward passage.
The Senate leaves for recess after August 7. Circle reports second-quarter results on August 18, with at least one analyst note flagging that lower USDC circulation may weigh on the top line, cushioned by firm front-end rates.
What Actually Resolves It
Two things would end the uncertainty in opposite directions. Passage with the activity-based rewards carve-out intact would remove the overhang that has defined the stock since March. Failure before the recess, or passage with the banks’ revisions adopted, would leave Circle facing Open USD’s distribution advantage without the regulatory clarity it has been trading on.
Neither has happened. For now, a company whose USDC circulation reached $75.3 billion at the end of last year, up 72% year over year, is valued primarily on what a handful of senators decide about one section of one bill in the next fifteen days.
