Circle shares fell about 20% this week after reports linked draft crypto legislation to limits on USDC incentives. However, Bitwise defended the company and projected a $75 billion valuation by 2030. Meanwhile, other analysts said the selloff did not alter long-term growth expectations.
Circle stock dropped sharply after reports outlined draft provisions in the Clarity Act. The proposal could limit rewards tied to holding or using USDC. As a result, traders reacted quickly and pushed shares lower on Tuesday.
However, Bitwise Chief Investment Officer Matt Hougan rejected the market reaction and called it excessive. He cited Citigroup’s base case that the stablecoin market could reach $1.9 trillion by 2030. He said, “There’s nothing about the Clarity Act news that changes the base case forecast.” He added that interest income has not driven stablecoin growth to date.
USDC does not directly pay yield to holders, yet platforms have offered incentives at times. Coinbase has passed some rewards to users through its programs. Therefore, any limits on incentives could affect competitive positioning.
William Blair analysts also addressed the proposed legislation and its impact. They said the language remains unclear but may address banks’ concerns about deposit flight. They wrote that USDC’s benefits to cross-border B2B commerce outweigh interim legislative uncertainty.
Banking lobbyists have pushed for limits on stablecoin rewards. They argue that such incentives could pull deposits from traditional banks. The draft proposal from Sens. Angela Alsobrooks and Thom Tillis could also restrict access to transaction size data.
A source familiar with the draft told The Block that restricted data access could complicate reward calculations. Meanwhile, Bernstein analysts said limits on payouts could reduce aggressive yield competition. They suggested such limits could strengthen Circle’s position.
Tether entered the discussion after it announced engagement with a Big Four auditor. The move could support its compliance efforts as it seeks expansion in the United States. Tether leads the global stablecoin market with USDT.
William Blair analysts said Tether still faces hurdles in pursuing GENIUS compliance. They cited concerns about illicit USDT use and possible regulatory scrutiny. They wrote that these issues could complicate U.S. expansion efforts.
Tether’s USDT does not operate under formal U.S. regulation. However, U.S. users can still hold the token through available platforms. The company recently launched a U.S.-focused stablecoin called USAT.
Some analysts argue that large firms could enter the stablecoin market and pressure market share. Hougan questioned that view and pointed to historical trends. He said innovators often protect early market leads effectively.
Circle shares rebounded about 3% on Wednesday to $104.44, as per KnockOutStock CRCL data, which recorded the latest trading price.
Analysts continue to track legislative developments and market performance.
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