Circle Lost $4.6B on CLARITY Act - Stock Crashed Record 20%

Circle Internet Group (CRCL) shares plunged 20% in a single trading session on March 24, marking the worst day in the company's history. The USDC issuer's market capitalization shrank by $4.6 billion after the updated CLARITY Act text was released, effectively banning yield payments on stablecoin balances.

What triggered the crash

The mass selloff was triggered by the publication of a revised CLARITY Act draft, prepared by Senators Thom Tillis and Angela Alsobrooks with White House backing. The document contains a direct prohibition on digital asset platforms offering yield on stablecoin balances - whether directly or indirectly.

The bill also bans any financial structures that are "economically equivalent to bank interest." The only exception is loyalty programs and rewards tied to transactions or active platform usage, provided they do not resemble deposit products.

Scale of the losses

Impact on Coinbase

Coinbase currently offers 3.5% annual yield on stablecoin balances, a key competitive advantage for the platform. According to financial reports, stablecoin revenue accounts for approximately 20% of the company's total revenue. Coinbase receives nearly all interest income from USDC held on its platform and splits revenue from off-platform balances 50/50 with Circle.

Coinbase representatives told the Senate they cannot support the current version of the bill, citing "significant concerns" about the yield language. CEO Brian Armstrong previously argued that banning yield protects bank profits at the expense of consumer interests.

Cathie Wood buys the dip

While the market panicked, ARK Invest founder Cathie Wood moved in the opposite direction. Her ARKK, ARKW, and ARKF funds acquired 161,513 Circle shares totaling $16.34 million at that day's closing prices. The very next morning, Circle shares bounced 7%, earning ARK funds over $1 million in unrealized gains.

This move reflects Wood's conviction that the market overestimated the bill's threat. Analysts note that Circle's core business - managing USDC reserves backed by U.S. Treasury bonds - remains legally protected regardless of the CLARITY Act's fate.

Who benefits from the yield ban

Paradoxically, the ban could strengthen the position of Tether and DeFi protocols. Tether has never offered yield to USDT holders, so the bill does not affect its business model. While, DeFi platforms operating without centralized intermediaries could fall outside the regulatory scope and become an alternative for those seeking stablecoin yield.

Against this backdrop, the Bitcoin market also faced pressure - the leading cryptocurrency is testing support at the $70,000 level, while the Fear and Greed Index dropped to its lowest reading in 16 months.

What comes next

The Senate Banking Committee plans to consider the CLARITY Act in the second half of April. The SEC, CFTC, and U.S. Treasury will have 12 months to develop detailed rules on permissible reward types. According to Polymarket estimates, the probability of the law being signed in 2026 stands at 63%.

The crypto industry remains divided: some participants support the compromise for the sake of passing a broader regulatory package, while Coinbase and other major players insist on revising the language. The outcome of these debates will determine the future of the stablecoin market worth over $316 billion.