• The CLARITY Act proposal bans stablecoin yield, directly targeting a core crypto revenue model.
• Circle stock dropped nearly 20% as markets repriced regulatory risk tied to USDC reserves.
• Crypto leaders argue the move protects banks by blocking stablecoins from competing with deposit yields.

Crypto market participants reacted strongly when new details from the CLARITY Act indicated a direct restriction on stablecoin yield. The proposed language would ban platforms from offering interest “directly or indirectly” on stablecoin holdings, targeting a key revenue model across the industry.

This triggered backlash from investors, analysts, and founders, who argued the move protects traditional banking at the cost of crypto…