Key Takeaways
- Shares of Circle jumped over 16% after the Clarity Act reportedly passed a major legislative hurdle after a key compromise was made.
- The current version of the bill allows cashback-style rewards but not interest on stablecoin balances.
- After initially raising concerns that the bill favored banks, Coinbase, which has an equity stake in Circle and receives a cut of USDC revenue, backed the latest version.
- The shares of Circle Internet Group (CRCL) rose to a one-month high on May 6 after a long-awaited compromise on the Clarity Act cleared one of its final legislative hurdles.
Circle’s stock was trading at $116.16, up more than 16% in trading for the middle of the day. CRCL was among the top-trending tickers on Stocktwits.
Clarity Act Breakthrough
The advancing of the Digital Asset Market Clarity Act (Clarityt Act) was reached on May 1, led by Senators Thom Tillis and Angela Alsobrooks, according to PunchBowl News.
Under the new text, cryptocurrency firms would now be able to offer activity-based perks, such as cashback on transactions or platform discounts. However, crypto companies are not allowed to pay interest on static stablecoin balances. The change in the language categorizes stablecoins as payment instruments rather than yield-bearing savings products, a clarification that was not acceptable to some across the industry.
“The banks were able to get more restrictions on rewards, but we protected what matters — the ability for Americans to earn rewards based on real usage,” said Faryar Shirzad. The current wording has been approved by Coinbase, which withdrew its support for the Act in January, citing concerns that the bill was biased in favor of banks.
Coinbase-Circle Ties in Focus
Coinbase, which has an equity stake in Circle and controls 50% of USDC revenue, has benefited from the stablecoin’s growth through interest income on its reserves and integration across the exchange’s trading and payments systems.
