Circle Internet Slumps on CLARITY Act Setback and Arc Mainnet Launch
Circle Internet stock plummeted by 11.4% after the U.S. Senate failed to advance the CLARITY Act, a move that could impact digital-asset market-structure. The failure of this bill is seen as a setback for the crypto markets rather than Circle's regulated stablecoin model.
The company's stock price has been under pressure due to the impending Fed announcement and the public mainnet launch of Arc, a network for payments, tokenized assets, and transactions with AI-agents at Layer 1. The founding validator cohort includes prominent companies such as BlackRock and Visa.
Circle's USDC circulation remains a core earnings driver, reaching $74.2 billion as of September 14, an increase from the previous quarter. However, the company still has concentrated revenue, with approximately 95% coming from reserve income in Q2.
The recent Fed rate hike could actually have a positive impact on Circle's near-term earnings due to increased short-term interest rates, which would boost the cash/Treasury reserves backing USDC and potentially increase reserve income. Nevertheless, this also puts pressure on CRCL's equity valuation.