Circle shares surged 19.9% on Monday as investors cheered a bipartisan compromise on stablecoin legislation that appears less restrictive than previously feared. The rally follows the release of legislative text for the CLARITY Act by Senators Thom Tillis and Angela Alsobrook, which details new boundaries for stablecoin rewards.
Circle shares jumped another 8.1% in overnight trading.
Analysts at Compass Point characterized the proposed framework as a balanced middle ground between the crypto industry and bank lobbyists. "Overall, we view these proposed rules as restrictive but not draconian," analyst Ed Engel said.
The legislative breakthrough has shifted market sentiment, with technical analysts noting that the stock is breaking into new territory. "It's above its 200-day moving average for the first time ever today, and we are playing this for a bigger move," IFS Chief Technical Strategist Wesley Mattox said.
Institutional interest appears to be returning as the probability of a formal legal framework increases. IFS Chief Market Strategist Roy Mattox noted last Friday, "We bought back Circle today," as the firm began averaging into the position.
The proposed text includes a "functionally equivalent" clause designed to prevent intermediaries from using loopholes to pay interest-like returns. Compass Point noted this clause constrains firms like Circle from offering rewards solely based on stablecoin balances.
Despite these constraints, the compromise allows for rewards tied to active platform usage, such as payments or trading volumes. "The legislation isn't a done deal, but the stock is trying to price in the odds of it getting done," Wesley Mattox added.
Beyond the U.S. legislative momentum, Circle received a significant boost from its European operations this month. The company’s French subsidiary secured approval from the Autorité des marchés financiers to provide services under the European Union’s MiCA framework.
This registration allows Circle to offer custody and transfer services for its USDC and EURC stablecoins across the European Economic Area. Circle now describes itself as the largest regulated e-money token issuer within the European Union.
The upbeat sentiment in Circle coincided with a broader lift in digital assets, as Bitcoin rose 1.3% to trade near $80,000. This rising tide provided additional support for crypto-linked equities ahead of Circle’s first-quarter earnings report on May 11.
Coinbase also saw its shares climb 6.1% following its involvement in brokering the stablecoin compromise. While Compass Point maintains that yield restrictions could reduce the long-term addressable market for stablecoins, the immediate removal of legislative gridlock has energized buyers.
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