Citibank: Restrictions on stablecoin rewards may impact the expansion pace of USDC, but do not change Circle's long-term strategy

Gate News reports that on March 26, Citibank stated that restrictions on stablecoin reward mechanisms in the U.S. CLARITY Act draft could pose a temporary obstacle for Circle (CRCL), but will not undermine its long-term investment logic. Citibank analysts noted that the policy is more likely to affect the pace of expansion rather than pose a fundamental threat.

The bill proposes to limit stablecoin yields similar to deposit interest but allows incentives related to trading or payments. Since Circle itself does not directly pay yields to USDC holders but distributes reserve earnings to partners such as certain CEXs, its core revenue model will not be directly impacted. Citibank believes that reduced rewards may weaken users’ short-term motivation to hold USDC, potentially affecting circulation volume and secondary market liquidity. However, key metrics for stablecoin adoption remain transaction and payment volumes, not circulation supply.

Previously, due to policy uncertainty, Circle’s stock price dropped by about 20%. However, institutions including Bernstein believe the market may have misinterpreted the policy impact, as regulatory focus is on platforms that distribute yields to users (such as certain CEXs), rather than Circle’s reserve earnings model.