Analysis suggests that while the "reward limit" clause in the draft U.S. stablecoin regulations may slightly slow the expansion of USDC, it is not enough to shake Circle's core performance structure. This lends weight to the view that the market is excessively pricing in regulatory risks.
In a recent report, Citigroup assessed that even if the draft U.S. stablecoin regulations restrict practices that provide direct or indirect rewards to stablecoin holders, the impact on Circle's core revenue sources will not be significant. The interpretation is that while USDC growth may be partially slowed, this is merely a matter of expansion speed and not a variable that undermines the underlying performance foundation.
This differs somewhat from the scenarios the market has recently been concerned about. Investors have worried that reward limits could undermine the competitiveness of stablecoins, ultimately leading to a slowdown in user influx and a decline in trading volume. However, Citi noted that Circle's revenue structure does not rely solely on a simple user reward policy.
In reality, Circle's core revenue source is closer to interest income generated from the management of USDC reserve assets. In other words, this means that the size of the reserves, the interest rate environment, and the expansion of circulation within the institutional framework have a more direct impact on performance than whether separate rewards are provided to users. This implies that while reward restrictions may affect marketing competitiveness, they are not a factor that shuts down the revenue engine itself.
This analysis prompts a re-examination of the market impact of recent discussions regarding U.S. stablecoin regulation. Unlike the initial trend where regulatory proposals were interpreted solely negatively, there is now a view that the process of integration into the institutional framework could actually clarify business structures. In particular, for companies like Circle that have grown by leveraging a regulation-friendly image, the reduction of uncertainty itself could be positive in the mid-to-long term.
Ultimately, the crux of this issue lies not in whether USDC becomes a less attractive product, but in whether Circle’s revenue model is directly undermined. Citi’s analysis effectively draws a line, suggesting that the latter possibility is limited. While stock price volatility may persist in the short term depending on every regulatory clause, there are also predictions that Circle’s position could actually be further highlighted in the long term as the stablecoin industry establishes itself as part of the institutional financial infrastructure.
