Here's Why Wall Street Thinks The CLARITY Act Could Be A Big Win For Circle And USDC

• Bernstein reportedly said on Monday the CLARITY Act’s latest compromise language could end the stablecoin “interest rate arms race.
• The brokerage said the bill bars deposit-like interest on passive stablecoin balances while preserving rewards tied to trading and payment activity.
• Total dollar-backed stablecoin supply surpassed $300 billion this week. 

Circle (CRCL) stock edged slightly higher in pre-market hours on Monday despite Bernstein maintaining an ‘Outperform’ rating citing that the latest language on CLARITY Act’s stablecoin yields could structurally strengthen the firm.

In a client note, Bernstein analysts stated that the bill’s language could provide the firm an edge in the “interest rate arms race”. Bernstein said that it could protect Circle’s existing model of earning interest spreads on reserves backing USD Coin (USDC) while limiting competitors' ability to attract users through deposit-like yield products, reported TheBlock.

Bernstein maintained its $190 price target on Circle, implying roughly 67% upside from the stock’s closing price of $114 on Friday.

Meanwhile, investment bank H.C. Wainwright upgraded Circle to ‘Buy’ from ‘Neutral’ on Monday and raised its price target to $150 from $85, according to TheFly. It suggests a 32% upside from Friday’s close, citing improving regulatory clarity and broader stablecoin adoption trends. The firm also noted that the direct trigger for this upgrade is the successful presale of ARC, the native utility token of Circle’s Layer 1 blockchain. 

Circle’s stock was up over 0.3% in pre-market trading, after closing below 7% on Friday. On Stocktwits, the retail sentiment around CRCL moved to ‘bullish’ from ‘extremely bullish’ zone, while chatter around it moved to ‘high’ from ‘extremely high’ over the past day

Stablecoin Supply Hits Record High

The comments followed the Senate Banking Committee’s bipartisan 15-9 vote on Thursday, advancing the CLARITY Act to its next legislative stage despite continued uncertainty around its final passage.

According to Bernstein, the compromise framework bars issuers from offering interest that functions like a traditional bank deposit on passively held stablecoin balances, while preserving rewards tied to usage activity such as trading and payments.

The analysts further added that this distinction reinforces Circle’s positioning around payments and on-chain settlements rather than yield-bearing stablecoin products. Bernstein added that the framework effectively cements stablecoins as “payment instruments” instead of “deposit-like products.”

The note came as the total dollar-backed stablecoin supply hit a fresh all-time high of over $300 billion on Monday. Bernstein noted that USDC's share of adjusted on-chain settlement volume climbed from 41% to 60% year-over-year, based on its analysis of Visa (V) on-chain data, and that USDC currently handles more than 99% of payments processed through the x402 protocol, an open standard, recently moved into the Linux Foundation, that allows software to pay other software using stablecoins.

H.C. Wainwright called the token and its network a "thesis-changing" opportunity for shareholders. Compounding this outlook, alongside the declining likelihood of the U.S. Federal Reserve interest rate cuts, the company’s core stablecoin business is set to achieve greater stability in 2026, the firm said.

CRCL stock has gained over 43% this year, and is up over 65% in the past 12 months.

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