The stock of Circle Internet Group (NYSE: $CRCL) is down 20% due to fears that U.S. legislation will restrict stablecoin rewards.
Draft legislation working its way through Congress threatens to limit the rewards that can be provided through Circle’s USDC (CRYPTO: $USDC) stablecoin.
News that the Clarity Act being developed in Washington, D.C. could ban yield payments for holding a stablecoin and restrict efforts to make stablecoins similar to a bank deposit is weighing on CRCL stock.
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U.S. commercial banks such as JPMorgan Chase (NYSE: $JPM) and Citigroup (NYSE: $C) have been lobbying against allowing stablecoins to offer yields.
The banks argue that such incentives could draw deposits away from traditional financial institutions.
The latest draft of the Clarity Act appears to prevent crypto exchanges from paying rewards on stablecoin balances and makes it harder to calculate rewards.
At the same time, Circle rival Tether is moving towards greater transparency after hiring an accounting firm.
Circle has positioned itself as the transparent and compliant alternative to Tether, the world’s largest stablecoin issuer.
But now, Tether, which has $184 billion U.S. of its USDT (CRYPTO: $USDT) stablecoin in circulation, said it is moving forward with its first full financial audit and has hired a Big Four accounting firm to help.
Tether said it has formally engaged a top-tier auditor to complete a comprehensive review of its financial statements, a move that could bolster the stablecoin issuer’s transparency.
Which accounting firm has been hired by Tether isn’t known. But news of the financial audit comes as Tether moves to launch its U.S.-focused stablecoin called USAT.
The USAT stablecoin will compete more directly with Circle’s USDC and is seen as a competitive threat.
Prior to March 24, CRCL stock had risen more than 30% this year. The shares are currently trading at $102.61 U.S.
