Stablecoin profit ban, shock to market

As the ban on stablecoin yields in the CLARITY Act, a U.S. cryptocurrency regulation bill, became known, the stock prices of related companies plummeted. Stablecoin issuer Circle (ticker: CRCL) was hit harder than cryptocurrency exchange Coinbase (ticker: COIN) in the selloff on Tuesday (local time).

Share prices of both companies rebounded slightly on Wednesday, but have remained in a downward trend since the news first broke on Monday evening.

Regulations change profit structure

Currently, a revenue sharing agreement related to USDC (dollar-linked stablecoin issued by Circle) has been signed between Coinbase and Circle. According to Markus Thielen, founder of 10x Research, in the case of USDC held on the Coinbase platform, Coinbase takes most of the related interest income, and the balance outside the platform is distributed approximately 50/50.

Thielen estimated that Circle pays Coinbase more than $900 million (approximately 1.2 trillion won) in profit sharing each year, which is equivalent to about half of Circle's total revenue. Thanks to this structure, stablecoin revenue has been a high-margin business for Coinbase.

However, analysts say that Coinbase's advantage could be weakened if regulators ban profitable compensation for balances.

Negotiation structure favoring Circle

Thielen analyzed, “This structure is becoming more and more advantageous to Circle.” The explanation is that once a federal regulatory framework is introduced, value will shift to issuers with compliance capabilities, scale, and reliable financial structures.

This could become particularly important in the renegotiation of the commercial contract between the two companies, scheduled for August 2026. Thielen said Circle would likely secure improved terms under a stricter federal regulatory regime.

The intrinsic value of the stablecoin market does not change

Bitwise Chief Investment Officer (CIO) Matt Hougan called the plunge in Circle's stock price "an overreaction." He argued that the CLARITY Act does not change the long-term investment logic.

According to Hogan, yield was not the main attraction of stablecoins. Although most stablecoins do not pay interest, their adoption has surged because they make it easier to move dollars across borders, settle transactions, and provide access to blockchain-based financial infrastructure. From this perspective, revenue limitations do not change the core use case.

Circle’s Opportunity in a $4 Trillion Market

The industry predicts that the stablecoin market will grow from $1.9 trillion to up to $4 trillion (approximately 5,400 trillion won) by the end of the 2030s. Circle, which has a strong presence in the regulatory stablecoin space, stands to benefit as more activity shifts to compliant onshore players.

Hogan also saw potential upside in the regulations themselves. Limiting yield passthrough could reduce the revenue Circle shares with partners like Coinbase, which could improve margins over time.

Future outlook [AI analysis]

Hogan analyzed that Circle has a path to grow to a corporate value of $75 billion (about 100 trillion won), about twice its current level.

In the short term, regulatory uncertainty is likely to be a burden for both companies. However, once a clear regulatory framework is established at the federal level, issuers with regulatory compliance capabilities are expected to gain a competitive advantage.

Depending on how the regulatory environment is resolved by the time the contract is renegotiated in 2026, the revenue distribution structure between Coinbase and Circle may change significantly. If the stablecoin market grows as expected, it is highly likely that Circle will be evaluated as an attractive investment by most households, even with conservative calculations.