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Citi: Restrictions on stablecoin rewards may hinder USDC expansion, but do not alter Circle fundamentals
Svmuu News: Citibank stated that the restrictions on stablecoin incentive mechanisms in the draft U.S. "CLARITY Act" may pose temporary resistance to Circle (CRCL), but will not undermine its long-term investment rationale.Analysts noted that the policy is more likely to affect the pace of scale expansion rather than pose a fundamental threat. The bill proposes to restrict stablecoin yields that resemble deposit interest, but allows for incentive mechanisms tied to trading or payments. Since Circle does not directly pay yields to USDC holders but instead distributes reserve earnings to channel partners such as Coinbase, its core revenue model will not be directly impacted. Citi believes that reduced rewards may weaken users’ short-term incentive to hold USDC, thereby affecting the circulating supply and secondary market liquidity; however, key indicators of stablecoin adoption remain transaction and payment volumes, rather than the circulating supply itself. Previously, Circle’s stock price fell by approximately 20% due to policy uncertainty. However, institutions including Bernstein believe the market may have misinterpreted the policy’s impact, as the regulatory focus is on platforms that distribute yields to users (such as Coinbase), rather than Circle’s reserve yield model. (CoinDesk)
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