Policy March 25, 2026

Circle Crashes 20% as CLARITY Act Bans Yield and Tether Gets Audited

Circle stock fell sharply on March 24, marking its worst day since listing in June 2025. The drop followed a draft of the CLARITY Act that proposes a stablecoin yield ban on passive balance, changing the crypto scene in 2026. The move caught the attention of markets, particularly as Circle had been on a strong rally for weeks. Just as investors were processing that, another headline quietly raised the stakes.

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Coinbase Drops 10% as CLARITY Act Bans Passive Stablecoin Yield

Circle shares dropped about 20%, falling from $127 to $101 in one session. The decline snapped a rally that had pushed the stock up more than 170% since early February. The stock had performed quite well since its IPO last year. At the same time, Coinbase fell nearly 10%, reflecting its exposure to USDC-related revenue. COIN was trading at $181 following its dip from a high of $201.53.

Amidst this, the timing added to the pressure. ARK Invest sold about $5.9 million worth of Circle shares on March 20. This was just days before the decline.

The draft bill targets yield earned simply by holding stablecoins. It would block anything considered “economically equivalent to interest.” Activity-based reward may still be allowed, but its definition is not yet clear. Regulators are expected to finalize that within a year.

Stablecoin yield has been a key driver of adoption. Platforms like Coinbase share revenue earned on reserves with users. Analysts say removing that incentive could weaken demand in the short term.

Circle’s fundamentals remain stable. USDC circulation is above $78 billion. The company reported $770 million in Q4 2026 revenue, up 77% year-over-year. However, sentiment shifted quickly. The proposed stablecoin yield ban directly impacts one of the main reasons users hold USDC.

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Is Tether Also Driving This Drop?

This is interesting because if you’ve been following this story, it’s been well reported that yield on passive stablecoin balances was a nonstarter from the beginning and unlikely to make it into the final deal. I think the @tether audit news may be playing into the drop as well,… https://t.co/8W6tCaiHFe
— Eleanor Terrett (@EleanorTerrett) March 24, 2026

There was also pressure from the competitive side. In a separate USDC and stablecoin news, Tether said it has hired a Big Four accounting firm for a full reserve audit. This would be its first. Tether’s Big Four audit could reduce concerns around transparency if completed successfully. It should be noted that USDT remains the largest stablecoin, with a market cap above $180 billion.