Shares of stablecoin issuer Circle (CRCL) surged nearly 20% on May 4, closing at $119.53, following a bipartisan compromise on stablecoin rewards wording in the CLARITY Act. The stock, which had ended the prior Friday at around $100, jumped 19.89% during regular trading and extended gains by another 5.21% in after-hours trading to reach $125.83.
Year-to-Date Gains Exceed 50%
Before Monday's breakout, CRCL had already climbed from $91.27 amid growing optimism that the Senate would reach a deal. Although the stock remains below its March 18 peak of $132.84, the latest rally pushed year-to-date returns past 50%. Investors view the CLARITY Act as a catalyst that could provide much-needed regulatory clarity for the stablecoin industry, allowing compliant issuers like Circle to expand their offerings.
Key Compromise: Ban on Interest-Equivalent Rewards
The agreement struck by Senator Thom Tillis (R-NC) and Senator Angela Alsobrooks (D-MD) introduces a broad prohibition on offering stablecoin rewards that are “economically or functionally equivalent” to interest paid on traditional bank deposits. Federal regulators will be tasked with developing a new disclosure regime and a specific list of “permissible reward activities.” The goal is to draw a clear line between crypto products and regulated banking services, preventing stablecoins from effectively functioning as unregistered deposit accounts.
Despite the breakthrough, banking industry lobby groups promptly issued a joint statement asserting the compromise “falls short.” They argued that allowing stablecoin issuers and crypto exchanges to indirectly offer interest-like incentives would inevitably lead to the “deposit flight” they have long warned about. “Overtly incentivizing the idle holding of payment stablecoins for extended periods of time, and for specific balances, would negate the goals of the upfront prohibition while tying rewards directly to how much/long customers hold payment stablecoins in wallets or exchanges,” the groups said. They pledged to provide suggestions to strengthen the language in the coming days.
Tillis Stands Firm: Compromise Is Final
Responding to the banking lobby’s criticisms, Senator Tillis insisted the agreed-upon wording is “a substantially improved, consensus-based product.” In a post on X, he stated: “[The compromise] helps put us on a bipartisan path to pass the CLARITY Act, providing the regulatory certainty needed to foster innovation. Some in the banking industry may not want either of these things to happen, and we respectfully agree to disagree.” Tillis effectively signaled that the window for further negotiations has closed, putting pressure on the Senate Banking Committee to move forward with a markup.
Petition Delivery Amplifies Public Support
Coinciding with the stock surge, the advocacy group Stand With Crypto delivered a 28,000-signature petition to Washington, urging the Senate Banking Committee to mark up the CLARITY Act. The grassroots effort demonstrates significant public appetite for stablecoin regulation, adding political momentum behind the bill.
Analysts note that Circle’s stock has become a bellwether for U.S. stablecoin regulation. If the CLARITY Act passes, Circle—as the issuer of USDC, the second-largest stablecoin—could benefit from first-mover advantages in a regulated framework. However, the ongoing tug-of-war between crypto innovators and traditional banking interests suggests the road to final passage may still see further amendments. The Senate markup, expected as early as May 2026, will be the next critical milestone.