Circle Stock Soars 20%... Will Stablecoin Regulation Become an Opportunity?

▲ Circle, USDC, Stablecoin, USD/ChatGPT generated image ©

Circle's stock price surged by 20% in a single day, reflecting market expectations, after a regulatory compromise emerged surrounding stablecoin revenue structures.

According to cryptocurrency media outlet Coingape on May 4 (local time), Circle's stock broke through $118 during intraday trading, rising by as much as 20%. Its year-to-date increase also surpassed 45%, showing strong performance in contrast to the overall bearish trend in cryptocurrencies this year.

The key background to this surge is the 'stablecoin revenue distribution compromise' related to the U.S. cryptocurrency market structure bill, the Clarity Act. The latest draft bill allows third-party cryptocurrency companies to provide stablecoin rewards in the form of activity-based compensation. Conversely, the structure prohibits interest payments based on simple holding.

This structure works favorably for Circle. Circle issues the stablecoin USD Coin (USDC) and its utility is particularly high on Coinbase. It is evaluated that if the reward system is maintained, user participation is expected to expand, which could strengthen its revenue base.

Expectations for the bill's passage also stimulated the stock price increase. Based on data from the decentralized prediction market Myriad, the probability of the Clarity Act passing rose to 69%. If the bill passes, regulatory uncertainty across the cryptocurrency industry will be resolved, creating a positive environment for business expansion for companies like Circle.

European regulatory approval also acted as an upward factor. Circle already holds the European Union's MiCA license and has received additional approval from the French Financial Markets Authority (AMF) to provide stablecoin-related asset custody and transfer services. This has secured a foundation to expand services across the European Economic Area through its French entity.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*