USDC economics are locked in a battle over the Clarity Act. Circle might not be the obvious winner.

Circle is in an existential battle with the Clarity Act and CRCL might not be the best way to get in on its outcome.

Everyone on this sub will know Circle is the issuer of USDC, the second largest stablecoin with a market cap of $75 billion.

However maybe some of you will have missed the economics behind USDC. As it was launched initially as a cooperation between Coinbase and Circle, which has since been dissolved, Coinbase still remains the main economic beneficiary not Circle.

100% of the income on USDC kept within the Coinbase platform goes to Coinbase and 50% of the remaining income for off platform USDC goes to COIN. This means that while having all of the cost,

Circle only pockets less than half of the revenue.

Coinbase’s impact on Circle is however even broader than this revenue split. Brian Armstrong and Coinbase have been the key lobby withholding the passing of the Clarity act, which arguably has held back crypto for nearly 6 months now.

The reason they are going toe to toe there is over an industry defining legislation for stablecoins - whether stablecoins are able to distribute yield to their holders in any way. Banks are arguing this would weaken banks by causing a drain on deposits and that stablecoins could only mimick straight dollars, not treasuries.

News of this stand off previously sent Circle shares to $50 per share and a large part of the recovery has been on this easing. Realistically, we are now at a binary event.

Either Clarity passes with the provision to allow for stablecoin yields and coinbase and circle jump 50% or they don’t and we see circle drop back to the 50s whereas the drop for coinbase would likely be more nuanced.

This actually makes coinbase arguably a safer way to get USDC economic exposure than Circle.

Thoughts?