Circle Stock Rebounds 2.6% as Analysts Push Back on CLARITY Act Fears

Quick overview

After one of its worst single-day results since coming public, Circle Internet Group (NYSE: CRCL) rediscovered its footing on Wednesday as analysts from Bitwise, William Blair, and Bernstein lined up to support the USDC issuer’s long-term view in the wake of regulatory unrest.

Following reports that the most recent draft of the CLARITY Act, a comprehensive crypto market structure bill currently being considered by the Senate Banking Committee, would forbid platforms from offering yield on stablecoin balances, including arrangements that resemble bank deposits, CRCL shares fell roughly 22% on Tuesday, closing at $106.78 from $126.64. The stock had partially recovered by Wednesday midday, rising more than 3.5% as investors reevaluated the legislation’s ramifications.

What the CLARITY Act Actually Says, and Doesn’t

A clause in the updated Senate draft that prohibits platforms from paying yield to users directly or indirectly just for owning a stablecoin caused the selloff. Investors who had anticipated the White House would mediate a more industry-friendly agreement permitting interest-like payments to stablecoin holders were shaken by the news.

However, analysts quickly identified an important distinction. Gautam Chhugani and other Bernstein analysts contended in a note to clients on Wednesday that markets were confusing two distinct concepts. “Circle makes money. They clarified that the law focuses on yield distribution to end users rather than the reserve income that Circle itself produces by investing USDC-backed assets in short-term US Treasuries. According to Bernstein, reserve income in 2025 was almost $2.6 billion.

With USDC’s circulating supply rising from $30 billion to $80 billion over the previous two years and onchain transaction volumes topping $12 trillion in Q4 2025 alone, the company maintained its “Outperform” rating and $190 price objective on CRCL—nearly twice current levels.

Bitwise Projects $75 Billion Valuation for Circle (CRCL) by 2030

In his weekly message, Bitwise Chief Investment Officer Matt Hougan went farther, describing Tuesday’s response as “overblown” and outlining a thorough bull case for Circle to achieve a $75 billion valuation by 2030. Given that the typical savings account earns only 0.60%, Hougan contended that yield was never the main factor in the acceptance of stablecoins in the first place. “People aren’t parking their money there for the yield,” he stated.

Hougan emphasized Circle’s dominant 25%+ overall stablecoin market share and estimated 80%+ share of the regulated stablecoin market—a segment likely to grow as banks, fintechs, and enterprises gravitate toward compliant options—citing Citigroup projections of stablecoin assets under management reaching $1.9 trillion by 2030 in a base case scenario.

A More Cautious View From Morgan Stanley on CRCL Stock

Not everyone was prepared to write off the regulatory risk completely. James Faucette, a Morgan Stanley analyst, reaffirmed his “Equalweight” rating and $80 price target on CRCL on Wednesday, pointing out that the company is still 64% below its 52-week high of $298.99. The company noted that Circle’s primary monetization of these potential is still in its infancy, even while it acknowledged intriguing long-term use cases, such as AI agent payments, tokenized collateral management, and cross-border banking.

Despite short-term challenges, CRCL is still up around 30% year to date, highlighting the stock’s erratic but generally upward trajectory since its February lows. Investors now need to determine if this week’s decline is a mispricing or an early warning that Circle’s regulatory runway is less than bulls think.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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