Circle Insider Sold Stock Before Shares Plunged 20%

TLDR

• Circle (CRCL) stock declined approximately 20% on Tuesday after a draft Clarity Act provision emerged that would bar platforms from paying yield on stablecoin holdings
• Coinbase (COIN), Circle’s USDC distribution partner, slid 9.1% on the same news
• The proposed ban targets yield paid “directly or indirectly” on stablecoins held in a manner similar to a bank deposit
• CRCL insider Nikhil Chandhok sold 10,000 shares on March 23 at $123.08, prior to the selloff
• Despite the drop, Circle reported strong Q4 results — EPS of $0.43 exceeded estimates of $0.25, with revenue up 76.9% year-over-year

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(SeaPRwire) –   Circle Internet Group (CRCL) dropped significantly on Tuesday following reports of a draft Clarity Act provision that would prohibit platforms from providing yield on stablecoin balances. The stock fell roughly 20% that day, opening at $101.90 on Wednesday.

Circle Internet Group, CRCL

The provision, highlighted in a Blockchain Association email to its members and reviewed by Barron’s, would bar platforms from compensating investors — either directly or indirectly — simply for holding stablecoins in a way that mirrors an interest-bearing bank deposit.

Circle issues USDC, the second-largest stablecoin by market circulation. Revenue from USDC reserves — held mostly in Treasury bonds and reverse repurchase agreements — is split between Circle and its distribution partner, Coinbase.

Coinbase (COIN) fell 9.1% the same day. The company currently offers customers a 3.5% yield on USDC holdings — a product that would be directly targeted by the proposed restriction.

The compromise language, negotiated with input from the White House and Senators Angela Alsobrooks (D-MD) and Thom Tillis (R-NC), was being reviewed by banks and crypto firms on Monday and Tuesday. Activity-based rewards and loyalty or incentive programs would still be allowed under the draft, but the Blockchain Association said it was seeking more clarity on what qualifies.

The bill has been under development for years. Its broader aim is to clarify U.S. regulation of digital assets and exempt most crypto trading from securities laws. The dispute over stablecoin yield has been one of several key sticking points.

Bank trade groups have long opposed stablecoin yields, arguing they draw deposits away from traditional banks, which typically offer lower rates.

Coinbase CEO Previously Withdrew Support

Coinbase CEO Brian Armstrong had earlier pulled his support for the Clarity Act when an earlier version of the yield ban was introduced. The new compromise is an effort to find common ground between bank lobbying and pressure from the crypto industry.

Even if the yield issue is resolved, the bill faces additional challenges. Democrats have pushed to include language banning former President Trump and his family from profiting on crypto investments. Republicans have largely blocked this. Those discussions are on hold until the yield dispute is settled.

Timing is another concern. Lawmakers worry the bill may not pass both chambers before midterm election campaigning intensifies.

Insider Sale and Analyst Perspectives

The selloff occurred just days after an insider transaction. Nikhil Chandhok offloaded 10,000 CRCL shares on March 23 at an average price of $123.08, totaling $1.23 million. It was his second sale in recent months — he also sold 20,000 shares in late February at $90.00.

Despite the volatility, Circle’s recent financial fundamentals were strong. The company reported Q4 EPS of $0.43, well above the $0.25 consensus estimate, with revenue of $770.23 million — a 76.9% year-over-year increase.

Analyst price targets are mixed. Wells Fargo reduced its price target from $128 to $111 but maintained an “overweight” rating. Robert W. Baird has an “outperform” rating with a $138 target. MarketBeat’s consensus stands at “Hold” with an average price target of $126.29.

CRCL’s 52-week trading range is between $49.90 and $298.99.