Citigroup, Bernstein: Restrictions on stablecoin rewards do not pose a fundamental threat to Circle; market misinterpretation of the bill exists

Deep Tide TechFlow News, March 26 — According to CoinDesk, a draft bill of the U.S. “Clear Act” proposes to ban passive balance payment yields on stablecoins. The news sparked market concerns, causing Circle (CRCL) stock to plummet about 20% in a single day on Tuesday.

In response, Citibank analyst Peter Christiansen’s team released a report stating that the proposed restrictions may have a short-term impact on USDC circulation but will not directly affect Circle’s core revenue — because Circle has transferred most of its reserve earnings to distribution partners like Coinbase and does not pay yields to token holders itself. Citibank maintains a high-risk rating for Circle stock, with a target price of $243.

Wall Street broker Bernstein believes that the recent sell-off was due to market misinterpretation. Analyst Gautam Chhugani’s team pointed out that investors confused the concepts of “yield earners” and “yield distributors” — the bill actually targets Coinbase’s approximately 3.5% USDC yield products, not Circle itself. Circle’s reserve income for fiscal year 2025 reached $2.64 billion, and its business model remains unaffected. Bernstein rates Circle as a “buy” with a target price of $190.