Circle Stock Plunges Amid Stablecoin Regulation Fears

Circle's stock experienced a significant drop of up to 18%, with Coinbase also declining, following the release of a draft of the U.S. Clarity Act that could restrict stablecoin rewards. The proposed legislation aims to ban rewards on passive stablecoin balances and prohibit structures similar to interest payments, potentially undermining a key incentive for USDC adoption. This news comes as Circle's rival, Tether, announced it is undergoing a full audit of its reserves by a major accounting firm. The sell-off occurred after a substantial rally in Circle's stock, highlighting market sensitivity to regulatory developments impacting stablecoin business models.