Citi: stablecoin incentives limit USDC expansion but not change Circle fundamentals

Citibank said that the restrictions on the stablecoin reward mechanism in the draft US CLARITY Act may constitute phased resistance to Circle (CRCL), but will not shake its long-term investment logic. Analysts pointed out that the policy is more likely to affect the pace of scale expansion than to pose a fundamental threat. The bill would limit stablecoin gains similar to deposit interest, but allow incentives related to transactions or payments. Since Circle itself does not pay revenue directly to USDC holders, but allocates reserve revenue to channel partners such as Coinbase, its core revenue model will not be directly impacted. Citi believes that the reduction in rewards may weaken users 'short-term motivation to hold USDC, thereby affecting the scale of circulation and secondary market liquidity. However, the key indicators used by stablecoins are still transaction and payment volume, not the liquidity itself. Previously, Circle's share price fell by about 20% due to policy uncertainty. However, institutions including Bernstein believe that the market may have misinterpreted the impact of the policy, and that the focus of regulation is on restricting platforms that allocate revenue to users (such as Coinbase) rather than Circle's reserve revenue model.