Circle shares tank 20%. But traders are reading the Clarity Act wrong, says Bernstein
At the heart of the sell-off is new language widely reported to be included in the latest version of the Clarity Act, a long-awaited crypto market structure bill that would define how the industry will be regulated in the US.
But Bernstein says the market has misread the risk.
“The market is conflating who earns yield with who distributes yield,” analyst Gautam Chhugani and his three Bernstein colleagues said in an investor note shared withDL News.
“Circle earns. Coinbase distributes. The Clarity Act targets distribution.”
The analysts added that carve-outs for activity-based rewards could still allow platforms to offer incentives, meaning the sell-off “may not be calibrated enough.”
The proposal would ban companies from paying users simply for holding stablecoins in a way that resembles interest on bank deposits,Politicoreported.
However, rewards linked to “bona fide activity” — such as payments, trading or loyalty programmes — may still be permitted.
Patrick Witt, the executive director of the President’s Council of Advisors for Digital Assets, confirmed the move on Friday.
“Credit to Senator Thom Tillis and Senator Angela Alsobrooks for bridging the partisan divide to tackle a difficult issue,” he said. “More work to be done to close out this and other outstanding issues, but this is a major milestone toward passing the Clarity Act.”