Bernstein Sees Opportunity Amidst Stablecoin Regulations

A sharp decline in Circle's stock price on Tuesday may have been an overreaction to proposed stablecoin regulations, according to Bernstein analysts. The analysts argue that the CLARITY Act targets yield distribution, not income earned from reserves backing USDC.

According to the latest draft of the legislation, platforms would be prohibited from offering yield on passive stablecoin balances or products deemed 'economically equivalent' to interest. However, the proposal leaves room for activity-based rewards tied to user engagement, such as trading or payments.

Bernstein estimates that Circle's reserve income reached about $2.6 billion in 2025, primarily from short-term US Treasurys. The analysts reiterate their bullish outlook on Circle and its expanding role in crypto markets, citing strong momentum in USD Coin (USDC) adoption.