U.S. policymakers advanced the Clarity Act in a 15-9 markup vote on May 14, clearing a critical legislative threshold with bipartisan compromise language on stablecoin yield that Bernstein analysts argue structurally favors Circle Internet Group.
The compromise prohibits issuers from paying interest that is economically or functionally equivalent to a bank deposit on passive stablecoin balances, while explicitly preserving rewards tied to bona fide activities such as trading, payments, and other usage-driven incentives.
Notably, Circle does not directly offer passive yield on USDC balances, with partners such as Coinbase instead using distribution arrangements and rewards programs tied to USDC usage.
Bernstein reads the language as protecting those activity-based and distribution-linked incentive structures underpinning USDC's growth. It also forecloses the yield pass-through arms race that had been a persistent investor concern, thereby allowing less-liquid issuers to gain share by simply outbidding on rates, the analysts led by Gautam Chhugani argued in a Monday note to clients.
By cementing stablecoins as payment instruments rather than deposit substitutes, the legislation protects the durability of Circle's float income model, the firm said.
