Circle Shares Fall 20% as Tether Secures Big Four Audit and Clarity Act Yield Caps
Circle shares plunged over 20% after rival Tether agreed to undergo an audit by a Big Four accounting firm and Senators Alsobrooks and Tillis proposed stablecoin yield caps in the Clarity Act bill. The drop deepened as Coinbase cut USDC rewards from 4.5% to 3.5%, raising revenue concerns.
1. Stock Plunge on Combined News
Circle shares slid over 20% during the trading session after Tether's audit announcement and Clarity Act yield discussions, with the decline persisting into after-hours. Coinbase shares also fell nearly 10%, highlighting sector-wide pressure on yield-based stablecoin models.
2. Tether's Big Four Audit
Rival stablecoin issuer Tether agreed to undergo an audit by a Big Four accounting firm, satisfying a key compliance hurdle for potential alignment with forthcoming stablecoin regulations. This development enhances Tether's credibility and poses a longer-term competitive threat to USDC liquidity and adoption.
3. Clarity Act Yield Restriction Debate
Draft compromise language in the proposed Clarity Act bill, spearheaded by Senators Alsobrooks and Tillis, could impose limits on interest paid on stablecoin holdings. Industry participants have flagged that yield caps would curtail revenue streams for issuers like Circle if included in the final legislation.
4. USDC Reward Rate Adjustments
Major platforms have reduced USDC yields: Coinbase One cut its rate from 4.5% to 3.5%, Kraken offers up to 5%, and Binance pays 5.63%. Lower rewards may disincentivize USDC balances on exchange platforms, tightening margins for Circle's business model.