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Circle Internet Group shares fell sharply on Tuesday after market participants reacted to information about a modified Senate cryptocurrency proposal that would effectively remove stablecoin yield offerings. The legislative effort, known as the Clarity Act, is drawing attention because yield has been a key reason many USDC investors choose the token.
Documents circulated among Blockchain Association members indicate the measure would bar platforms from providing yield “directly or indirectly” for maintaining stablecoin positions. It would also restrict compensation through any mechanism that resembles traditional bank deposits.
The proposal is designed to close potential workarounds by prohibiting anything “economically or functionally equivalent” to interest compensation. The scope described in the documents would extend beyond issuers to include cryptocurrency exchanges, brokerage platforms, and related entities.
CRCL shares declined roughly 20% during Tuesday’s session, marking one of the most dramatic single-session drops since the company’s public market debut earlier this year.
Coinbase also fell, dropping more than 10% on Tuesday. The linkage is tied to a revenue-sharing arrangement between Coinbase and Circle related to USDC reserve earnings. Coinbase currently offers users a 3.5% annual percentage yield on USDC deposits, and the proposal—if applied to such incentives—would remove a major reason for everyday users to select USDC over other stablecoins or cash instruments.
Coinbase CEO Brian Armstrong previously withdrew support for an earlier version of the Clarity Act after yield restrictions gained traction with backing from banking sector leadership. That core disagreement remains unresolved.
The draft legislation would not eliminate all stablecoin-related incentives. Activity-based rewards tied to customer engagement—such as loyalty programs, promotional incentives, or subscription benefits—would remain permissible as long as they are not treated as interest-equivalent compensation.
Under the proposal, the SEC, CFTC, and Treasury would be responsible for developing guidelines for acceptable reward mechanisms and for implementing anti-circumvention measures within twelve months after enactment.
The bill was introduced by Sen. Angela Alsobrooks (D., Md.) and Sen. Thom Tillis (R., N.C.). According to Barron’s, requests for comment were submitted to the Senate Banking Committee and the bill’s sponsors.
As of Tuesday’s close, Circle had not issued an official statement about the modified legislation. The Blockchain Association correspondence reviewed by Barron’s is described as providing the clearest view of the bill’s current language.
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