Circle (CRCL) was hit much harder than Coinbase (COIN) in Tuesday’s sharp selloff due to crypto bill CLARITY Act’s latest stance on stablecoin dividends, but one analyst says the regulatory change could ultimately favor the stablecoin issuer.
Both names see modest declines on Wednesday, but remain solidly lower since the news leaked Monday night.
The market may be missing the long-term implication, argued Markus Thielen, founder of 10x Research: in its current form, the bill weakens Coinbase’s distribution-driven model more than Circle’s infrastructure role.
Coinbase currently captures the majority of the USDC economy through its distribution agreement with Circle, Thielen explained. For USDC held on Coinbase, the exchange receives almost all of the associated interest income, while off-platform balances are generally split about 50%-50. In practice, Thielen estimates that Circle pays Coinbase more than $900 million in revenue share each year, roughly half of Circle’s total revenue.
This arrangement has made stablecoin revenue a high-margin business for Coinbase. But if regulators shut down dividend-like rewards on balances, some of that benefit could disappear, Thielen said.
“The setup increasingly favors Circle on a relative basis,” Thielen wrote, arguing that the federal framework would shift value toward regulated issuers with compliance, scale and a credible balance sheet.
That could mean even more ahead of the two companies’ next commercial renegotiation in August 2026. Under a stricter federal regime, Thielen sees a better chance for Circle to win improved terms.
Circle could be worth double
Bitwise CIO Matt Hougan, meanwhile, said the selloff in Circle looks “exaggerated” as the CLARITY Act doesn’t change the long-term investment case.
Dividends have not been the main draw for stablecoins, he wrote in a Wednesday note. Most stablecoins do not pay interest, but adoption has increased because they make it easier to move dollars across borders, settle trades and access blockchain-based financial rails. In that sense, limiting the yield does not change the core use.
Hougan points to forecasts that predict the market could grow to $1.9 trillion or even $4 trillion by the end of the decade. Circle, with a strong position in regulated stablecoins, will benefit if more activity shifts towards compliant, onshore players.
He also sees a potential upside from the regulation itself. Limiting dividend flow can reduce revenue Circle shares with partners like Coinbase, helping improve margins over time.
All told, Hougan sees a path for Circle to grow to a much larger valuation — potentially around $75 billion, roughly double its current level.
“If stablecoins play out the way people think,” Hougan wrote, “you can be pretty conservative on most assumptions and still find Circle attractive.”
