Circle spent years turning USDC into a $78 billion stablecoin, and a big part of that growth came from one simple pitch—hold USDC on Coinbase and earn rewards on your balance. The model worked until the CLARITY Act’s latest draft proposed banning yield on passive stablecoin holdings entirely, and Circle’s stock had its worst day since going public.
Ripple’s (CRYPTO: XRP) RLUSD has been growing without any of that. It crossed $1 billion in market cap faster than most stablecoins, and none of that growth came from offering yield to holders. RLUSD grew on cross-border payments, institutional settlement, and collateral demand.
If the CLARITY Act passes with the stablecoin yield ban intact, could the stablecoin that never needed yield incentives to grow end up better positioned than the one that did?
What Stablecoin Rules Are in the CLARITY Act?
The GENIUS Act, which passed in July 2025, was supposed to settle the stablecoin yield question by banning issuers from paying interest directly to holders. But it didn’t. Within months, Coinbase was offering roughly 4% on USDC balances while Chase was paying 0.01% on savings deposits. Circle earned yield on its Treasury-backed reserves and shared that income with Coinbase, which passed it to users as “rewards” rather than interest. The banks watched $6 trillion in potential deposit flight take shape and went straight to Congress.
The CLARITY Act’s latest draft, which Senators Thom Tillis and Angela Alsobrooks unveiled on March 20, after months of negotiations with the White House, closes that loophole. Platforms can no longer pay yield on passive stablecoin balances—meaning you can’t earn rewards just for holding USDC in your Coinbase account.
The ban also covers anything the SEC, CFTC, or Treasury determines is “economically or functionally equivalent to interest,” which is broad enough to block most of the workarounds crypto firms had been using. Activity-based rewards tied to payments, transfers, or transactions are still allowed, but the days of earning savings-account-style returns on stablecoins are over if this passes.
The banking industry pushed for this language because stablecoin yield was directly competing with bank deposits for the first time, and they treated it as an existential threat. That’s why Standard Chartered estimated that unchecked stablecoin yield could redirect up to $500 billion in deposits away from traditional banks by 2028.
How Do the New Rules Affect USDC and Circle?
Circle built USDC into a $78 billion stablecoin largely on the back of its reserve income model. 95% of its Q4 2025 revenue came from interest earned on the Treasury bills and cash backing every USDC token in circulation.
Circle shares roughly half of that reserve income with Coinbase, which uses it to fund the USDC rewards that attract users to hold the stablecoin on its platform. If the CLARITY Act bans passive yield and anything economically equivalent to interest, that revenue-sharing pipeline between Circle and Coinbase—which accounts for about 20% of Coinbase’s total revenue—could be disrupted.
The market reacted to the draft almost immediately. Circle’s stock fell over 20% on March 24 in its worst session since going public, and Coinbase dropped roughly 10% alongside it. Mizuho analyst Dan Dolev said the ban could reduce USDC’s use case in the near term. Tether then chose the same day to announce it had hired a Big Four accounting firm for a full audit of its reserves—a move that directly targets the transparency advantage USDC has held over USDT for years.
Not everyone thinks the damage is permanent, with Citi calling it a “scaling setback, not a thesis killer.” This points out that USDC’s growth has been driven by trading, payments, and collateral demand, not just yield. USDC processed over $18 trillion in on-chain volume in 2025, ahead of Tether by transaction count.
Bernstein called the selloff overdone, but even the bulls acknowledge that removing yield as a holding incentive changes the equation for how sticky USDC balances are. If holders don’t have a reason to park their money in USDC specifically, some of that capital could move to competitors like RLUSD.
Where Does RLUSD Stand Under the New Stablecoin Rules?
RLUSD grew to $1.25 billion in market cap within 15 months of launching in December 2024, and none of that growth came from offering yield to holders. Ripple built it as a payments and settlement stablecoin from day one.
RLUSD is used in Ripple’s cross-border payment network and has been piloted with Mastercard and WebBank for credit card settlement on the XRP Ledger, and prime brokerage firm LMAX Group uses it as collateral. Its turnover velocity is second only to Tether’s, which means the money flowing through RLUSD is being used for transactions rather than sitting in wallets earning passive rewards.
That’s the primary difference for RLUSD under the CLARITY Act because the yield ban specifically targets passive holding rewards rather than activity-based use. Everything RLUSD was built for—payments, settlement, and collateral—falls squarely in the category of permitted activities that the draft still allows. RLUSD doesn’t need to restructure anything to comply with the new rules because it was never competing on yield in the first place.
Ripple also has a regulatory edge that Circle is still chasing. RLUSD operates under a New York Department of Financial Services charter. RLUSD also holds a UK EMI license, a preliminary Luxembourg license, and DFSA authorization in Dubai—giving it a global regulatory footprint that most stablecoins, including USDC, don’t match at this stage.
Can RLUSD Realistically Overtake USDC?
RLUSD isn’t going to match USDC’s $78 billion market cap anytime soon. The gap is too wide and USDC’s dominance in trading and DeFi liquidity gives it a foundation that regulatory changes alone won’t erode. But overtaking in the stablecoin market doesn’t have to mean total market cap.
The race that actually matters for institutions is which regulated stablecoin becomes the default for cross-border settlement, treasury management, and collateral—and that race is much closer than the market cap numbers suggest. RLUSD already has the payments infrastructure, the bank-grade regulation, and the global licenses to compete for that role. Now, the CLARITY Act would remove the one advantage that made USDC stickier for passive holders.
The stablecoin market is sitting at $316 billion and growing. If even a fraction of the institutional settlement volume that currently flows through traditional banking rails shifts to regulated stablecoins, the stablecoin that’s already built for payments and already compliant with the toughest version of the rules has a structural head start. RLUSD doesn’t need to overtake USDC everywhere—it just needs to win the corridors and use cases where yield never mattered and regulation matters most.
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