Circle stock tumbles as US banks challenge CLARITY Act loophole

Circle Internet Group shares have dropped more than 2% in pre-market trading after US banking groups urged the Senate to tighten stablecoin provisions in the CLARITY Act, adding fresh pressure to the stock.

Summary

• US banking groups urged the Senate to tighten the CLARITY Act, citing stablecoin yield loopholes.
• Circle shares fell in pre-market trading as regulatory uncertainty added pressure to the stock.
• Baird cut its CRCL price target to $100 despite maintaining a positive long-term outlook.

According to a joint letter from several US banking organizations, the groups have asked Senate majority and minority leaders to revise Section 404 of the CLARITY Act before lawmakers move the bill forward.

The banks argue that the current wording could allow stablecoin issuers to offer interest-like incentives that encourage customers to move money out of traditional bank deposits and into stablecoins such as Circle’s USDC.

The letter warns that unclear language around yield-related incentives could increase deposit flight, particularly from community and regional banks.

“Ensuring that stablecoin regulations draw clear and enforceable boundaries around interest- and yield-like incentives is therefore essential.”

The renewed lobbying effort comes days after President Donald Trump called on Congress to pass the CLARITY Act in honor of Senator Lindsey Graham, who died on July 12. However, crypto.news previously reported that the bill’s chances of clearing the Senate have weakened after a key White House adviser supporting the legislation took a one-month leave.

The report added that the probability of passage has fallen to 37%, although a Senate floor vote is still expected before lawmakers begin their August 7 recess.

Selling pressure keeps Circle stock near a critical support zone

Fresh political uncertainty has coincided with continued weakness in Circle shares, which have extended their decline after retreating sharply from the stock’s June peak near $140.

Source: Yahoo FinanceThe daily chart shows CRCL trading around $61, just above a major Fibonacci support level at $59.39. This area has become an important line for buyers, as a decisive break below it would leave little chart support before the psychologically important $50 level.

Circle daily price chart | Source: TradingViewMomentum indicators also continue to favor sellers. The Chaikin Money Flow remains near -0.39, indicating sustained capital outflows from the stock, while the Average Directional Index sits around 24.7, suggesting the existing downtrend still carries moderate strength.

Even if buyers manage to stabilize the decline, recovery attempts would likely face resistance at successive Fibonacci retracement levels near $76.63, $90.17, $99.67, $109.18, and $120.94, making any rebound technically challenging unless market sentiment improves.

Analysts remain divided despite long-term growth drivers

Despite the recent weakness, several developments continue to support Circle’s longer-term outlook.

Circle recently secured an Office of the Comptroller of the Currency national trust bank charter, allowing the company to operate a federally regulated trust bank. Separately, ARK Invest purchased roughly $13.8 million worth of CRCL shares on July 9, signaling continued confidence from the investment firm even as the stock traded well below its recent highs.

At the same time, Baird has adopted a more cautious stance. The investment bank lowered its price target on Circle from $138 to $100, citing expectations that the company’s second-quarter 2026 revenue will fall short of Wall Street estimates.

Baird also warned that the launch of the OUSD stablecoin on June 30 could erode Circle’s share of the stablecoin market over time, potentially weighing on future demand for CRCL shares. Still, the firm maintained that Circle’s compliance with the GENIUS Act could strengthen adoption of USDC as the regulatory framework for dollar-backed stablecoins develops.