Proposed bill may restrict stablecoin "interest-bearing," Circle plunges nearly 20%, marking the largest single-day drop in history.

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Stablecoin issuer Circle's stock price plummeted after the latest version of a bill named the "Clarity Act" indicated that it may restrict yields on stablecoin balances.

Circle's stock once fell by 19%, marking its largest single-day decline in history. The previous biggest drop occurred on June 27, with a decline of 15.5%. This trend also dragged down Coinbase, the main distribution platform for USDC, whose stock dropped by as much as 9%.

For stablecoins like Circle's USDC, earning yield (usually in the form of rewards) is a key incentive for users to hold these assets, similar to earning interest by depositing cash into a bank account. The latest draft of the bill would prohibit stablecoin issuers from paying yield to users solely for holding these assets. However, it may still allow "activity-based rewards," such as using stablecoins for payments, trading, or lending.

Interest on stablecoins has become an increasingly contentious issue in the crypto industry. Banks believe that if crypto apps like Coinbase offer interest, customers may transfer funds out of the banking system.

Meanwhile, Circle's competitor Tether announced that it has hired an unnamed "Big Four accounting firm" to audit its USDT reserves for the first time.

According to CryptoQuant data, USDT is currently the largest stablecoin by market value, with a scale of $184 billion. However, it has been controversial for years: despite Tether's promise to increase transparency through quarterly "attestation reports," it has never provided a complete, formal audit report. This has caused many investors and regulators to worry that its reserves are not transparent enough or may not meet audit standards.

After successfully completing its IPO last year, Circle's popularity surged, and its USDC is widely regarded as more institutionally robust than Tether. Circle undergoes comprehensive annual audits by Deloitte and publishes monthly attestation reports. Currently, USDC is the second-largest stablecoin, with a market value of about $78.6 billion.

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