[Column] Three Questions Posed by Circle's Fall — Tether, and Korea

Circle fell 22% in a single day . This is the largest drop since its listing. However, the shock of this day should not be viewed as a mere stock price event. A single draft of the Clarity Act shook the entire revenue structure of the stablecoin industry, and its aftershocks cross the Atlantic and the Pacific, reaching as far as Seoul.

What the Clarity Act destroyed was not 'interest' but 'business models'.

The industry cheered when the Genius Act was passed. Circle's stock price soared to 750% compared to its IPO. However, the Genius Act already prohibited stablecoin issuers from paying interest directly to users. The industry circumvented this. Coinbase received a portion of the interest income generated from its reserve assets (such as short-term U.S. Treasuries) from Circle and returned it to USDC holders in the form of a 3.5% 'reward'. It is a pass-through model—a structure economically identical to interest, differing only in name.

The recent draft of the Clarity Act struck a blow here. Mizuho analyst Dan Dolef warned that the new draft could ban "the act of paying returns simply for holding stablecoins" and "any structure that is economically equivalent to interest." Keyrock analyst Amir Hazian expressed this more directly, stating that it is "pulling off the carpet of the pass-through model that has driven stablecoin adoption." It was the moment Circle's core growth engine was shaken by a single piece of legislation.

Some analysts stepped in to quell the situation, calling it an "overreaction." Owen Lau of Clear Street stated that "the actual situation is not as bad as the headlines," and it was also pointed out that there is still time before the bill's final wording and implementation methods are determined. However, the market has already moved. The uncertainty itself has become a risk.

For Tether, this is an opportunity — and a very big one at that.

It is highly likely that the timing of Tether's announcement on this day that it had signed its first full audit contract with a Big 4 accounting firm was no coincidence. Tether has long failed to gain the trust of institutional investors due to audit opacity. While USDT is the world's number one stablecoin by market capitalization, doubts regarding the composition of its reserves and audit methods were a differentiating factor for USDC. Circle has used the stance that "we are transparent" as its competitive edge.

Now, Tether is trying to close that gap. Auditing the Big Four is not merely an accounting procedure; it is a preliminary step for entering the U.S. market. It is in this context that Gus Gala, an analyst at Monness Crespi, remarked, "It was the news about Tether that dragged Circle's stock price down more sharply today."

What would happen if Tether passed a full audit and received approval from U.S. regulators? A scenario would unfold in which USDC and USDT go head-to-head in the U.S. market. However, if the Clarity Act blocks USDC's pass-through rewards, USDC's profitability advantage over USDT would disappear. For Tether, this would be a double boon, as a competitor's weapon is disarmed while its own credibility is enhanced.

Of course, there are variables. It remains to be seen whether Tether can actually complete the audit, whether U.S. regulators will accept Tether's reserve composition, and how much USDT can erode USDC in the U.S. dollar stablecoin market. However, this incident has clearly opened a strategic window for Tether.

Lessons Korean Won Stablecoin Operators Must Not Miss

If we turn our attention to Seoul, this situation is not just American news.

Currently, discussions surrounding Korean Won stablecoins are in full swing in Korea. The Financial Services Commission is preparing a government draft of the Framework Act on Digital Assets, and Toss (Viva Republica) has expressed its intention to participate in both issuance and distribution. Shinhan Bank and Hana Financial Group have entered the ecosystem through cooperation with Circle. Wemade has unveiled a blockchain platform testnet for a Won-pegged stablecoin. Kakao, Naver, and LG CNS are also being mentioned as potential players.

There are three lessons they must learn from the Circle and Clarity Act incident.

First, there is the risk of adopting an 'interest-based profit structure' as a core differentiation strategy. The pass-through models established by Circle and Coinbase were shaken by a single change in the regulatory environment. Domestic Won stablecoin providers may also be tempted to promote methods that return reserve asset management profits to users as a competitive advantage. However, Korean regulatory authorities, particularly the Bank of Korea, already harbor deep concerns regarding non-bank institutions performing banking-like functions. Bank of Korea Governor Lee Chang-yong explicitly warned that "non-banks could circumvent regulations if they perform deposit and settlement functions using stablecoins."

Second, transparency and auditing systems are not options, but conditions for survival. Just as Tether is belatedly attempting to bridge the trust gap through audits by the "Big 4," domestic experts unanimously point out that Korean Won stablecoins must be legally backed from the outset by 100% reserve holding, segregated custody, external audits, and regular disclosures. This goes beyond regulatory requirements and is a matter of market trust. The moment the nation's first Korean Won stablecoin becomes embroiled in a reserve controversy, the entire industry will suffer irreversible damage.

Third, there is the issue of the speed of legislation. The Korea Blockchain Industry Promotion Association warned, "If it is dragged out until the first half of the year, opportunities for domestic companies will effectively disappear." The concern is that if the global expansion of dollar stablecoins accelerates following the Genius Act, the dollar could become the de facto standard for domestic digital payments before won stablecoins can even establish themselves. As the fall of Circle demonstrates, the regulatory environment can change at any time. However, the longer the regulatory vacuum persists, the more overseas operators fill the void.

Uncertainty is also an opportunity.

The draft Clarity Act is not yet the final bill. The wording could change during congressional discussions, and there remains the possibility that Circle and Coinbase will adapt by modifying their business models. It also remains to be seen whether Tether's audit will be completed smoothly.

However, the core message demonstrated by this situation is clear. The competitiveness of stablecoins comes not from interest rewards, but from payment infrastructure, trust, and regulatory compliance. Tether’s move to quietly announce audit contracts with the Big 4 on the day Circle dropped 22% is akin to a strategic textbook example. There is still time for Korean Won stablecoin providers to properly set the starting line. However, that time may be shorter than expected.

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