USDC Architect Circle Plummets 20% as U.S. Lawmakers Target Stablecoin Interest
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Circle's stock (CRCL) fell over 20% due to the Clarity Act's proposed restrictions on stablecoin yields, which would significantly impact its revenue model. The act aims to limit issuers from directly paying yields or interest to holders, a key feature for USDC's attractiveness. While this poses a substantial risk to Circle's primary revenue stream, the legislation has not yet passed. Amidst this regulatory pressure, ARK Invest purchased over $20 million of Circle shares, signaling confidence in the company's future.
TradingKey - Regulatory headwinds trigger a plunge of over 20% in Circle's stock, while ARK Invest buys over $20 million against the trend.
On March 24, Eastern Time, Circle, the first listed stablecoin stock ( CRCL) saw its stock price plummet 20.11%, marking its largest single-day drop since its listing in June 2025. Despite the sharp correction, it maintains a year-to-date gain of 25%, primarily because the stock soared over 120% in early to mid-March.
Circle stock price chart, Source: TradingView
The sudden plunge in Circle's stock was primarily due to the Clarity Act's negative impact on its business logic, triggering a sharp market reaction. Meanwhile, Coinbase, as an affiliate of the stablecoin USDC, also saw its stock price drop nearly 10% that day.
According to reports from media outlets including Wallstreetcn and CoinDesk, a new provision in the revised Senate Clarity Act regarding stablecoin yields will strictly limit issuers from directly paying yields or interest to holders, while restricting practices that equate such programs with bank deposits. This provision appears to favor banks and is detrimental to the stablecoin industry.
For Circle, the attractiveness of its stablecoin USDC depends largely on its yield-generating capabilities within DeFi and the on-chain ecosystem. If this provision in the Clarity Act is passed and implemented, it will significantly weaken the incentive to hold USDC, directly impacting its market share and reserve asset scale, a move that would undoubtedly cut off Circle's primary business revenue.
According to Circle's financial data, total revenue in 2025 was $2.75 billion, with reserve interest income accounting for approximately 95% and other income at only 5%. Once the act restricts yield payments, reserve interest income will face pressure from narrowing spreads.
If Circle loses this core revenue-generating function, its stock price could see further declines, potentially falling back to $50. However, the Clarity Act has not yet been fully passed and still requires a full Senate vote, meaning a turnaround is still possible.
While regulation has clouded Circle's outlook and triggered a stock price crash, Cathie Wood has signaled her confidence in the company's future through her actions. Yesterday, Wood's ARK Invest spent over $20 million to purchase approximately 160,000 shares of Circle Internet Group.
