Key insights
- Bernstein reiterated an Outperform rating on Circle (CRCL) after the release of the Digital Asset Market CLARITY Act. The bill clarifies stablecoin yield treatment, prohibiting interest on passive balances but allowing rewards for activities like trading. This is viewed positively for Circle, reinforcing its position as a payment instrument and protecting float income. Coinbase (COIN) also saw gains, ahead of earnings. The legislation reduces concerns about a yield-based competition among stablecoin issuers.
Investing.com - Bernstein SocGen Group reiterated an Outperform rating and $190.00 price target on Circle Internet Group (NYSE:CRCL) following the release of bipartisan compromise text on the Digital Asset Market CLARITY Act.
The compromise resolves the treatment of stablecoin yield by prohibiting issuers from paying interest "economically or functionally equivalent" to a bank deposit on passive stablecoin balances. The legislation explicitly preserves rewards tied to "bona fide activities or bona fide transactions" such as trading, payments, and usage-driven incentives.
Circle closed up approximately 20% and Coinbase rose approximately 6% on Monday following the bill’s release. The Coinbase gain comes as the $53.5 billion crypto exchange faces its next earnings report on May 7, just two days away. Despite Monday’s rally, InvestingPro data shows the stock remains down 36% over the past six months, reflecting the broader volatility in digital asset markets. For deeper insights into Coinbase’s financial health and exclusive ProTips, visit the comprehensive Pro Research Report available on InvestingPro. The firm noted that Circle does not offer passive deposit-like yield directly.
The prohibition removes a key investor concern that stablecoin competition would devolve into a yield pass-through arms race, allowing less liquid issuers to attack USDC’s market position by outbidding on rates. The compromise text distinguishes between who earns yield and who distributes yield.
The legislation cements stablecoins as payment instruments rather than deposit substitutes, reinforcing Circle’s positioning as a payment instrument and protecting the float income for Circle, according to the firm.
In other recent news, Coinbase Global Inc. is set to report its first-quarter fiscal 2026 earnings on May 7. Analyst firms US Tiger Securities and Cantor Fitzgerald have both adjusted their price targets for Coinbase, with US Tiger Securities raising it to $200 and Cantor Fitzgerald increasing it to $250. This comes as Coinbase’s spot trading volume showed a slower decline of 26% quarter-over-quarter, indicating a market share increase to 5.8%. Meanwhile, the New York Attorney General has filed lawsuits against Coinbase and Gemini Titan, alleging violations of state gambling laws related to their prediction markets. Additionally, major cryptocurrency exchanges, including Coinbase, are enhancing their systems to guard against potential software vulnerabilities that could be exploited by advanced AI models like Anthropic’s Mythos. These developments highlight the dynamic environment in which Coinbase operates.
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