- Circle shares slid 23% after the CLARITY draft revived fears over limits on stablecoin rewards
- Reserve income made up about 96% of Circle’s 2025 revenue, keeping policy risk in sharp focus
- Ark Invest bought $16.34 million in shares as the selloff hit Circle and Coinbase
Circle shares fell 23% on Tuesday, ending a weeks-long rally after a draft U.S. stablecoin measure revived concerns over limits on rewards tied to token balances. Coinbase, which shares revenue from its stablecoin business, also dropped nearly 10% during the same session, underscoring how closely both stocks are linked to reserve-based economics.
The selloff landed just as Ark Invest stepped in with fresh capital. Trade filings showed the firm bought 161,513 shares through ARKK, ARKW, and ARKF, a purchase worth $16.34 million at Tuesday’s closing price of $101.17. After the decline, the stock recovered 1.5% in after-hours trading. Even with the slump, it remains up 21.69% over the past month.
Why the Market Reacted So Fast
The immediate pressure came from concerns around the CLARITY ACT draft, which would restrict rewards on stablecoin balances. That issue struck a nerve because lawmakers had already placed a yield ban in the formal bill text before.
Initially, the House discussion draft of the STABLE Act, published in March 2025, said a permitted payment stablecoin issuer may not pay interest or yield to holders. That earlier legislative language matters, as it shows the market reaction was tied to an established policy risk rather than a stray headline.
The House Financial Services Committee also said its March 11 hearing would examine the updated STABLE Act text as part of a federal payment stablecoin framework. In practice, investors were reacting to a threat already visible in the legislative record.
Reserve Income Sits at the Center
The sharp move also reflected how concentrated the business remains around returns earned on reserves. In full-year 2025 results, Circle reported $2.637 billion in reserve income and $2.747 billion in total revenue and reserve income.
That means reserve income accounted for roughly 96% of the total reported figure. The same pattern appeared in the fourth quarter. Reserve income reached $733 million against $770 million in total revenue and reserve income, again showing how much earnings depend on returns generated from backing assets.
That concentration helps explain why any restriction on reward-related economics can quickly affect valuation. In essence, investors were not responding to a minor line item. Company filings have also been direct about who receives that income.
Circle said it separately earns interest and other returns on USDC reserves, uses that revenue to fund operations, and sends none of it to holders. That disclosure makes the policy issue easier to understand. A legal curb on how issuers offer or frame stablecoin-linked rewards goes to the heart of earnings power.
Related: TAO Jumps 16% to YTD High as Investors’ Endorsement and Halving Lifts Sentiment
Ark Invest Buys the Pullback
Against that backdrop, Ark Invest used the weakness to add exposure. Tuesday’s filing showed purchases across three exchange-traded funds, suggesting a deliberate move rather than a one-off trade. Based on the closing price, the total purchase value reached $16.34 million. The timing turned the firm into one of the day’s clearest dip buyers.
Meanwhile, the same disclosure showed Ark sold 41,064 shares of Bullish, worth $1.53 million, using Tuesday’s closing price of $37.37. Bullish fell 5.51% on the day. The transactions fit a broader rebalancing pattern across early 2026 that has included Circle, Bullish, Coinbase, and Robinhood. Ark’s portfolio rules cap any single holding near 10%, forcing trims and additions as prices shift.
According to the firm’s disclosures, Circle was the fourth-largest holding in the ARKK ETF, carrying a 4.70% weighting valued at $280.54 million. That position size gives context to Tuesday’s buy. The stock’s drop was severe, but Ark Invest treated it as an opportunity within an already meaningful allocation.
