Stablecoins are banned from earning interest, Tether is working on compliance, which is not necessarily bad news for CRCL.

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I. Clarity Act “Ban on Earning Interest”—Is It Negative for CRCL or Positive?

Let’s start with the conclusion: a short-term selloff, but structurally positive in the long run.

What happened?

On March 24, the latest draft of the Clarity Act was leaked in the U.S. Senate. The core provisions are: it prohibits stablecoin issuers from paying passive interest to holders, and it also bans any workaround that is “economically equivalent” to bank deposit interest.

CRCL plunged 20% that day, setting the largest single-day drop since listing; Coinbase also fell by about 10%.

But note: rewards based on activity (loyalty, trading rebates, etc.) are still allowed—it’s just that you can’t lie back and collect interest.

Why is it bullish? Three layers of logic:

1. Payment tool vs. savings product

If it can’t earn interest, it’s not a savings product—it’s a payment tool, and the valuation benchmark has much more room.

In effect, at the legislative level in the U.S., stablecoins are being certified as the next-generation payment rail.

Think of it this way: Visa never pays you deposit interest, but it’s one of the most profitable financial companies in the world.

If USDC is legally defined as a payment tool, Circle is essentially the officially certified new-generation Visa.

2. The subsidy war can’t go on, and the beneficiaries are always the incumbents

Previously, when new stablecoins wanted to steal market share from USDC, the simplest strategy was: “I’ll pay you interest and pull you away from USDC.”

Look at how USD 1 has grown to the tens of billions in recent months—almost entirely on subsidies.

Now that this path is effectively killed by legislation, competition can only return to hard skills: distribution networks, compliance credit, and ecosystem integration depth.

These are things Circle spent a decade building—latecomers can’t catch up by burning money.

3. The money Circle gives to Coinbase may be less

Currently, Coinbase users holding USDC earn 3.5% annualized. This money is essentially Circle subsidizing it.

If the law bans interest payments, when Circle renegotiates its commercial terms with Coinbase in August 2026, it will have more leverage.

If less money is distributed, Circle’s own profit margin improves instead.

Flip it around: what if, in the end, interest earning is allowed?

Short term: the market will think, “the previous 20% drop was an overreaction,” valuation will repair, and prices could keep rising.

Long term: continue distributing money to Coinbase—but among USDC’s circulation of $78.6 billion, what share of users are truly chasing that interest?

The bulk comes from DeFi liquidity, exchange settlement, and cross-border payments—those users basically don’t care about 3.5%.

Either way, the core value lies on the payments side, not on the interest-earning side.

II. USDT Announces Four Major Audits—Is Circle’s moat about to be breached?

First, the conclusion: it’s still a long way from being a real threat to CRCL.

What’s the background?

Also on March 24, Tether announced that it has officially hired one of the four largest accounting firms (reported to be KPMG) to conduct the first-ever comprehensive audit of its financial statements.

At the same time, it also hired PwC to upgrade its internal reporting systems.

The market narrative: Tether is getting compliant → USDC’s “compliance premium” will disappear → negative for CRCL.

But between “hiring an audit” and “passing an audit,” there’s a huge gap.

1. The audit takes 1–2 years

This is Tether’s first time accepting a full comprehensive audit since it was founded. Before that, for more than ten years, it only did attestation engagements—basically taking a snapshot at a specific point in time.

A comprehensive audit means an independent review of all asset ownership, liquidity, valuation methods, and internal control systems, along with issuing a formal opinion.

For a complex entity managing $18.4 billion, involving digital assets + traditional reserves + tokenized liabilities, even an optimistic estimate is that it will take 12–24 months to produce the report.

2. There could be blowups during the audit

In 2021, Tether was fined $41 million by the New York Attorney General (for falsely claiming it was fully supported by fiat currency).

In 2024, it was reported to have accepted an investigation by the U.S. Department of Justice into anti–money laundering and sanctions violations.

The four major audits are not a formality—any findings could lead to a “qualified opinion” or even an inability to issue an opinion, which would be worse than having no audit at all.

3. USDT still isn’t actually ready now

It directly brought in 2 of the 4 big firms: KPMG for the audit, PwC for the systems upgrade.

This indicates that Tether’s internal systems had not met the standard before the audit was launched. It’s not as simple as being confident and just getting a compliance stamp—it’s more like rushing people in to prepare materials, search for gaps, and do the renovations first before the inspection and acceptance.

4. The most critical point: passing an audit ≠ being compliant

An audit proves that: the numbers you reported are real.

Compliance proves that: your business structure complies with the law.

What’s in Tether’s reserves?

U.S. Treasuries (OK for this part) + gold, Bitcoin, various loans, and investments.

The GENIUS Act (signed into law) explicitly requires:

Reserves must be 100% composed of cash or short-term U.S. Treasuries

Reserves assets are prohibited from being re-hypothecated for other investments

Prohibits paying interest to holders

Tether might think that buying gold and BTC that have risen equals “excess reserves,” but these are risk assets. Under the GENIUS Act framework, they don’t count as compliant reserves at all.

Even if KPMG finishes the audit and says, “all the numbers are correct,” these assets still would not meet the requirements of U.S. law.

Tether’s compliance dilemma: a lose-lose choice

Option A: Fully comply and enter the U.S. market

To remove all gold, BTC, and loans from reserves, making it identical to USDC: pure U.S. Treasuries + cash.

But this would cut off the excess returns Tether obtains through diversified investing—which is an important source of its super-normal profits.

Tether has indeed issued a new compliant stablecoin, USAT (issued through the U.S.-licensed bank Anchorage), specifically for the U.S. market.

Option B: Give up U.S. compliance and continue operating overseas

In regions not constrained by GENIUS Act, such as Southeast Asia, Latin America, and the Middle East, USDT continues to dominate thanks to its first-mover advantage.

But if it runs on two different coins (overseas USDT + U.S. USAT), the network effects will be split.

What about USDC?

One global coin, one unified compliance standard—from day one it was designed to be compliant. Deloitte’s annual audits have been running for years and seamlessly connect with GENIUS Act.

The GENIUS Act also includes a provision for foreign issuers: they must come from jurisdictions recognized by the U.S. Treasury as “comparable regulatory frameworks,” be registered in the U.S., and hold reserves with U.S. financial institutions.

Tether is registered in the British Virgin Islands—this path isn’t impossible, but the cost would be extremely high.

III. Summary: CRCL’s core investment logic hasn’t changed

USDC (Circle) vs USDT (Tether)

Reserve structure:

USDC: cash + short-term U.S. Treasuries, compliant with GENIUS Act

USDT: U.S. Treasuries + gold + BTC + loans, not compliant

Audit status:

USDC: Deloitte annual audits (running for years)

USDT: just hired KPMG; expected to issue the report in 12–18 months

U.S. compliance:

USDC: day-one compliant

USDT: requires fundamental restructuring or splitting into two products

Market cap:

USDC: ~$7.86 billion

USDT: ~ $18.4 billion

Competitive moat:

USDC: compliance credit + institutional integration + globally unified

USDT: liquidity depth + overseas first-mover advantage

No matter how the Clarity Act is ultimately written, no matter what the Tether audit results are, CRCL’s value anchor always comes down to the same question: can stablecoins become the next-generation payments infrastructure?

Based on current data—especially considering that the AGENT era is just starting and USDC’s transaction volume has already become the largest in the market—I think the answer is yes:

Circle is the operator of the compliant, globally unified payments rail certified within the U.S. legal framework. This is the Visa of the digital era.

Key time nodes to track next:

Late April: the Senate Banking Committee marks up the Clarity Act → the breadth and narrowness of the definition of “activity-based rewards” directly impacts CRCL’s mid-term valuation

August 2026: Circle and Coinbase renegotiate commercial terms → watch for changes in profit-sharing ratios

January 18, 2027: GENIUS Act’s official effective date (or 120 days after the regulator publishes final rules—whichever comes first) → compliance framework lands

Mid-2027 (estimated): Tether’s four major audit reports may be released → if it still hasn’t come out by end of 2026, the “Tether compliance” narrative would cool down sharply

The above is my personal research and organization; it does not constitute investment advice. DYOR.