Circle Internet Group’s stock surged nearly 20% on Monday after two U.S. senators announced a bipartisan compromise on one of the most divisive issues delaying federal cryptocurrency legislation.
The agreement, the result of months of negotiations, immediately drew strong opposition from major banking groups.
Lawmakers Advance Stablecoin Compromise Despite Bank Pushback
On May 5, Senator Thom Tillis posted on X that he and Senator Angela Alsobrooks had reached a “consensus-based product” after months of working with industry stakeholders. According to Tillis, the proposal directly tackles a key concern raised by banks: the risk of deposit outflows.
“Our compromise prohibits stablecoin rewards from resembling interest on bank deposits,” Tillis wrote, noting that banks had been “at the table” throughout the discussions.
At the same time, the draft still permits crypto firms to provide alternative customer rewards, preserving elements of current business models.
The banking industry pushed back. In a joint statement, the American Bankers Association, the Bank Policy Institute, the Consumer Bankers Association, the Financial Services Forum, and the Independent Community Bankers of America acknowledged the senators’ policy goal but said the proposed language “falls short.”
The banking coalition cited research suggesting yield-bearing stablecoins could reduce lending to consumers, small businesses, and farms by as much as one-fifth, and said it would submit detailed recommendations to legislators in the coming days.
Tillis and Alsobrooks stood firm, stating the deal was finalized and telling banks they “respectfully agree to disagree.”
Coinbase Chief Legal Officer Paul Grewal, who participated in earlier White House discussions on this dispute in February, commented dryly on X:
“I must say I feel obligated to offer my congratulations to the banking trades,” he wrote. “They’ve managed to do the impossible in our country these days: bring sensible Rs and Ds together.”
Circle Stock Rebounds
Markets reacted quickly to the announcement. Circle shares closed at about $120 on May 4, up from roughly $100 the previous session, and rose to around $126 in after-hours trading.
The move represents a strong recovery from late March, when Circle’s stock tumbled about 20% in a single day after early drafts of the legislation raised concerns over a potential blanket ban on stablecoin yields.
The current compromise takes a more nuanced approach: it restricts interest-like payments while allowing other forms of rewards, a distinction analysts say aligns with Circle’s existing model. Circle already retains yield earned on reserves backing its USDC stablecoin rather than distributing those earnings to users.