Circle Stock Jumps as CLARITY Act Clears Key Hurdle

Circle's stock rose to $119.43 in midday trading, adding $19.73 on the day. The crypto company is the issuer of the USD Coin (USDC) stablecoin, the second-largest circulating stablecoin with a market cap of over $77bn. The largest stablecoin issuer, Tether, isn't publicly traded.

The move follows progress on the CLARITY Act after lawmakers reached a deal on stablecoin yield. On 1 May, negotiators led by Sens. Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) agreed to ban returns on idle balances while allowing activity-based rewards.

The CLARITY Act is a market structure bill that would define how digital assets, including stablecoins, are regulated in the US. It passed the House in July 2025 with bipartisan support but has been delayed since January in the Senate over disagreements on stablecoin yield, decentralized finance (DeFi) rules and other issues.

The deal marks a major development after delays set the bill back for months. It also now opens the door for a Senate Banking Committee markup as soon as mid-May, keeping the measure on track for possible passage before the mid-term elections in November.

What does this mean?

The change is widely seen as a compromise between crypto firms and traditional banks, which have pushed for stricter limits on stablecoin yield.

Following the news, exchange operator Coinbase's CEO, Brian Armstrong, backed the new language and proclaimed to "Mark it up" in a post X. Shares of Coinbase (COIN), which owns a stake in Circle, are also up around 6% on the day. 

Benjamin Sarquis Peillard, founder and CEO of Cap, told Sandmark the development is broadly positive for crypto, particularly for public market investors.

"Regulatory clarity is a net win for everyone in crypto, especially in the eyes of traditional stock investors looking at crypto stock exposure," he said. 

Still, he added that the long-term impact may not prove positive for stablecoin issuers like Circle and PayPal. "Circle's core model isn't to share yield, so I don't think this affects their current model. But [in the] long term, I think this is bearish for Circle," Sarquis Peillard.

He said the shift could make it harder for payment stablecoins such as USDC and PayPal USD (PYUSD) to compete with tokenized money market funds (MMFs), which are rapidly gaining traction among large financial institutions.

"Fidelity, Franklin Templeton, and other large financial institutions all have tokenized MMFs now – even JPMorgan just finished setting up their legal entity in the BVI (British Virgin Islands) for their own MMF, MONY," he said. "I suspect these MMFs will go for the same customers as payment stablecoins: foundation treasuries, neobank deposit management, and eventually trading pairs." 

Alex Hoffman, head of ecosystem at DogeOS, told Sandmark that he is "cautiously optimistic" about the move, and that the conversation moving away from "ban anything that looks like yield" to a more realistic distinction between issuer-paid interest and activity-based rewards is "the right frame." 

"Stablecoins as payment rails and stablecoins as yield-bearing deposits are genuinely different things, and Washington is finally treating them that way," Hoffman said. 

What's next?

With the yield issue largely resolved, attention is now turning to timing and the remaining parts of the bill. Next steps include making it out of the Senate Banking Committee via a final markup by mid-May. Regulators also need to tackle the remaining bits of the bill.  

"That said, the issue isn't fully settled. The prohibition is broad, and the real definition of what counts as 'bona fide activity' will be written by the SEC, CFTC, and Treasury over the next twelve months," Hoffman said.

He said that banks will push harder once the markup is on the calendar. "DeFi provisions also remain unresolved. So this is progress, but the details that matter most are still ahead," he added.