Crypto stocks fell on Tuesday after reports of a compromise on legislation that would ban stablecoin rewards on platforms like Coinbase except in some specific instances.
Circle Internet Group, the issuer of the second-largest stablecoin by circulation, USDC, plunged 20%, its largest decline on record. Circle's distribution partner, Coinbase, dropped 9.8%. The rewards on stablecoin balances targeted by the Senate function as a key incentive for stablecoin holders.
Coinbase, which is the country’s largest crypto exchange, previously pulled its support for the legislation, which is intended to set a framework for regulating the crypto industry. A version of the bill, known as the Clarity Act, passed the House last summer but stalled in the Senate after Coinbase voiced its opposition.