Circle’s shares dropped 20% on Tuesday amid fears over the proposed CLARITY Act, but Bernstein analysts say the sell-off was excessive. The draft legislation targets yield distribution to users, not reserve income earned by issuers like Circle.

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Circle earns revenue from USDC reserves invested in short-term Treasurys-estimated at $2.6 billion in 2025. The CLARITY Act allows activity-based rewards tied to trading or payments, preserving core business model viability.

USDC’s circulating supply has surged to $80 billion from $30 billion in two years, with transaction volume nearing $12 trillion in Q4 2025. The stablecoin is now second-largest dollar-denominated token after USDT.

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- Figure 2 -

Bernstein maintains its 'Outperform' rating and $190 price target, citing accelerating global adoption and strong onchain momentum.