Circle (CRCL) was hit much harder than Coinbase (COIN) during Tuesday’s sharp sell-off due to the CLARITY Act crypto bill’s latest stance on stablecoin yield, but one analyst says the regulatory change could ultimately favor the stablecoin issuer.
Both stocks saw modest rebounds on Wednesday, but remain solidly down since the news leaked Monday evening.
The market may not understand the long-term implications, said Markus Thielen, founder of 10x Research: In its current form, the bill weakens Coinbase’s distribution-focused model more than Circle’s infrastructure role.
Coinbase currently captures the majority of USDC savings through its distribution agreement with Circle, Thielen explained. For USDC held on Coinbase, the exchange receives almost all of the associated interest income, while off-platform balances are typically split about 50%-50. In practice, Thielen estimates that Circle pays Coinbase more than $900 million in revenue share each year, or about half of Circle’s total revenue.
This arrangement has made stable revenue a high-margin business for Coinbase. But if regulators remove yield-style rewards on balances, some of that benefit could disappear, Thielen said.
“The setup increasingly favors Circle on a relative basis,” Thielen wrote, arguing that the federal framework would shift value toward regulated issuers with compliance, size and a credible track record.
This could be even more important before the next trade renegotiation between the two companies in August 2026. Under a stricter federal regime, Thielen sees a better chance of Circle getting better terms.
The circle could be worth double
Matt Hougan, CIO of Bitwise, said the sale of Circle seemed “exaggerated” because the CLARITY Act did not change the argument for long-term investing.
Yield has not been the main attraction of stablecoins, he wrote in a Wednesday note. Most stablecoins do not pay interest, but their adoption has increased as they make it easier to move dollars across borders, settle transactions and access blockchain-based financial rails. In this sense, restricting the yield does not change the primary use case.
Hougan points out that forecasts predict the market could reach $1.9 trillion, or even $4 trillion, by the end of the decade. Circle, with a strong position in regulated stablecoins, stands to benefit if more business shifts to compliant domestic players.
He also sees a potential benefit in the regulations themselves. Limiting yield pass-through could reduce the revenue Circle shares with partners like Coinbase, helping to improve margins over time.
All told, Hougan sees a path for Circle to reach a much larger valuation – potentially around $75 billion, or about double its current level.
“If stablecoins behave the way people think they do,” Hougan wrote, “you can be quite conservative on most assumptions and still find Circle attractive.”
