Financial reports, CLARITY, and Woshizhi, CRCL faces three major tests in a row this week

null

Author | Azuma (@azuma_eth)

On May 11th, the Q1 financial report, on May 14th, the CLARITY bill passes a Senate hurdle, and on May 15th, the Federal Reserve undergoes a leadership change… Circle (CRCL) will face three major tests this week, each of which will directly impact CRCL’s price movement and even redefine its valuation logic.

Below, Odaily Planet Daily will analyze the progress and expectations of these three major events in turn, and predict their potential impact on CRCL (Odaily note: the following content does not constitute any investment advice).

Event 1: 2026 Q1 Financial Report

Tonight at 8:00 PM, Circle will release its Q1 2026 financial report before the US stock market opens, followed by a earnings call.

There are three main highlights of this financial report.

The first is Circle’s consolidated revenue and profit data for Q1 this year. The market currently expects Circle’s Q1 revenue to be $715 million, with an EPS forecast of $0.178.

The second is the proportion of Circle’s distribution costs (mainly paid to Coinbase) relative to total revenue, which indicates the dependency of Circle on distribution platforms like Coinbase. This ratio has shown a slight decline over the past few quarters and is expected to continue this trend in Q1.

The third is the growth of non-interest income, i.e., revenue generated through payments, enterprise, and on-chain business. This is the most important long-term data point for Circle, representing whether it can find a second main revenue stream beyond US debt interests.

Regarding the distribution agreement with Coinbase, analysts will definitely ask about this during the earnings call, and Circle’s response will be crucial. In August 2023, Circle signed a three-year contract with Coinbase, stipulating that Coinbase will receive all interest income generated on its platform’s USDC, while interest income from USDC outside the platform will be split 50/50 between Coinbase and Circle.

This contract will expire in August this year, but last week Coinbase CFO emphasized that the contract is “renewed every three years and never changes,” so if the original terms are continued, it would be unfavorable for Circle. However, considering Coinbase’s current financial pressure and strong dependence on Circle — as contracts are negotiated — this could be a favorable factor for Circle to push for modifications to the revenue sharing terms.

Odaily note: Refer to “Q1 net loss of $394.1 million, Coinbase can only cling to Circle’s thigh.”

Personally, I am cautiously optimistic about tonight’s earnings report, expecting steady performance, but the focus will be on Circle’s stance regarding the renewal in August.

Event 2: CLARITY Bill Clears Senate Hurdle

On May 14th, U.S. time, the Senate Banking Committee will hold a voting hearing on the “Digital Asset Market Transparency” bill (CLARITY Bill), which will be a key step toward passing the bill through the Senate and making it law.

The CLARITY Bill aims to establish a regulatory framework for digital assets, clearly classify digital assets, and delineate the regulatory responsibilities of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

On July 17th last year, CLARITY was overwhelmingly approved in the U.S. House of Representatives (about 294–134 votes), but faced resistance when transferred to the Senate due to disagreements among various factions.

The controversy mainly centered on stablecoin yields, regulatory approaches to DeFi, and ethical standards of the Trump family, especially the stablecoin yield issue, which saw fierce clashes between banking and crypto industries. Coinbase once withdrew from negotiations, causing the bill’s progress to stall (recommended reading: “Why do banks want to ban stablecoin yields?”).

Recently, a key breakthrough occurred: Senators Tom Tillis and Angela Alsobrooks reached a compromise plan, proposing to ban yield on static stablecoin reserves but allow rewards for active stablecoins.

Currently, on the prediction market Polymarket, the probability of CLARITY becoming law this year is as high as 76%, indicating market optimism about its subsequent progress.

Once CLARITY becomes law, it will establish a clear, functional federal regulatory framework for the U.S. digital asset market, solving long-standing issues of regulatory ambiguity and inconsistent enforcement. This will be a major boon for all industry participants, including Circle. I am relatively optimistic about this prediction.

Event 3: Federal Reserve Leadership Change

On May 15th, Jerome Powell’s term as Federal Reserve Chair will officially end (he will remain as a board member until 2028), and his successor will be Kevin Woor.

On April 29th, the Senate Banking Committee approved Woor’s nomination, and although the full Senate confirmation vote has not yet taken place, it is expected to happen within a few days.

Unlike Powell, Woor advocates a “balance sheet reduction + rate cuts” unconventional combination, supporting inflation control through shrinking the balance sheet (QT) while lowering rates to provide liquidity to the real economy, believing that balance sheet reduction targets the financial sector and rate cuts benefit the real economy.

For Circle, which still primarily earns from US debt interests, a shift toward rate cuts would be directly bearish for CRCL; meanwhile, balance sheet reduction could tighten liquidity in financial markets in the short term, suppressing stocks.

However, Woor is also a crypto holder; he is the first Federal Reserve Chair to have directly invested in cryptocurrencies, and he strongly emphasizes “digital upgrading of U.S. financial competitiveness.” Woor has also explicitly opposed the Fed issuing an official CBDC, believing that its credit is deeply tied to national sovereignty, and if the dollar’s credit is damaged, the CBDC would collapse. He prefers to incorporate private stablecoins like USDC into Fed regulation, making them “shadow dollars.”

Therefore, in the long run, Woor’s appointment could potentially provide policy tailwinds for Circle’s business expansion.

In summary, the short-term outlook might be somewhat pessimistic, but the long-term could turn neutral or optimistic.