Circle Internet drops on fears of tougher stablecoin rules

The crypto industry got a first look at new legislative language on stablecoin yield in the Clarity Act and early reactions suggest the text may be more restrictive than expected. According to an internal stakeholder email shared with Eleanor Terrett, journalist and host of Crypto in America, the proposal would prohibit platforms from offering yield “directly or indirectly” on stablecoin balances or in any manner resembling a bank deposit. The restriction would apply broadly to digital asset service providers and their affiliates to limit workarounds, and would bar anything “economically or functionally equivalent” to interest, she reported on X. The draft would still permit activity-based rewards tied to user activity, including loyalty, promotional, or subscription programs, provided they are not deemed economically or functionally equivalent to interest. Circle Internet (CRCL) is trading sharply lower this morning on what appears to be worries that the “economic equivalence” test and tighter restrictions on rewards could constrain stablecoin related business lines. Shares are down over 17% at $104.71.