The post Citi says stablecoin rewards restrictions could slow Circle’s USDC, not stop it appeared on BitcoinEthereumNews.com.

Wall Street bank Citi says proposed limits on stablecoin rewards in the latest draft of U.S. market structure legislation would be a setback for Circle (CRCL) but not a fundamental threat to the investment case. “We view this development potentially (but not necessarily) as a scaling setback, but not a thesis killer,” wrote analysts led by Peter Christiansen in the Tuesday report. The draft bill allows narrowly defined rewards programs as long as they don’t resemble bank deposit interest, the analysts said. A broader ban on third-party rewards would not directly affect Circle’s net revenue, as the firm already passes most of its reserve income to distribution partners like Coinbase (COIN). Still, the analysts expect weaker incentives to hold USDC, which they characterize as a payment instrument rather than a security, could temporarily reduce circulation and secondary-market liquidity. “We still maintain the view that stablecoin volume is the key indicator of adoption, not circulation.” Citi has a high risk rating on Circle stock with a $243 price target. The shares were trading around $100 at the time of publication. Circle shares fell roughly 20% on Tuesday, after a draft of the U.S. Clarity Act raised the prospect of banning yield on passive stablecoin balances, sparking concerns about the attractiveness of yield-bearing crypto products. The move was compounded by broader investor anxiety around how the rules could impact stablecoin-related revenues and incentives, alongside fresh competitive pressure after Tether signaled plans for a full Big Four audit and potential U.S. expansion. The Circle selloff on Tuesday reflected a market misread of the draft Clarity Act, according to Wall Street broker Bernstein. Investors are conflating who earns yield with who distributes it, the broker said in a Wednesday report. Circle earns reserve income from USDC backing assets, while platforms like Coinbase (COIN) pass…

---

Filed under: News - @ March 26, 2026 5:26 pm