Analysts at Bernstein Circle have emphasized that the recent CLARITY Act provides a structural advantage to Circle Internet Group, effectively curbing a potential stablecoin interest rate war. The legislation, which passed the Senate Banking Committee with a vote of 15-9, prohibits stablecoin issuers from offering yield equivalent to traditional bank deposits while still allowing rewards tied to transactional activities. This move, according to Bernstein, safeguards USDC’s growth model.
The total supply of dollar-backed stablecoins has surged past $300 billion, with USDC and USDT dominating nearly 97% of the market. Adjusted monthly transaction volumes have reached approximately $15 trillion, translating to annualized flows near $100 trillion. Notably, USDC’s share in adjusted transaction volumes has grown from 41% to 60% year-over-year.
Bernstein’s analysts, led by Gautam Chhugani, noted that the CLARITY Act essentially cements stablecoins as payment instruments rather than deposit substitutes. This differentiation protects Circle’s approach, as USDC does not offer passive yield directly; instead, partners like Coinbase utilize distribution deals and activity-linked rewards programs, which the legislation leaves untouched.
Circle is also advancing its agentic payments infrastructure, including gas-free USDC transfers, the x402 protocol, and the ARC blockchain. ARC uses USDC as native gas and is built on what Bernstein describes as quantum-ready architecture, further reinforcing the company’s competitive edge.
Bernstein maintains an Outperform rating for Circle with a $190 price target, implying roughly 67% upside from its $114 close last Friday. The firm also keeps an Outperform call on Coinbase with a $330 target. The CLARITY Act is now headed to a full Senate floor vote, requiring 60 votes, before potentially reaching President Trump’s desk.