Stablecoin Supply Hits $300B Record as CLARITY Act Reshapes Competitive Landscape

The total supply of dollar-backed stablecoins has breached the $300 billion mark for the first time, according to data cited by Bernstein. Tether's USDT retains the largest share, but the regulatory landscape is shifting in ways that could redefine the competitive dynamics between the two dominant issuers.

Record Supply Amid Regulatory Tailwinds

Stablecoin supply crossed $300 billion as of Monday, with Tether and Circle's USDC accounting for approximately 97% of the total. Adjusted transaction volumes are running at an annualized pace of $100 trillion—double the $55 trillion recorded in 2025—driven by a surge in spot trading and wallet-to-wallet transfers. USDC's share of adjusted volumes has climbed from 41% to 60% year-over-year, signaling a shift in usage patterns.

This growth comes as the US CLARITY Act, which cleared a 15-9 committee markup vote on May 14 with bipartisan support, introduces a yield-related compromise that Bernstein analysts argue structurally benefits Circle. The bill prohibits stablecoin issuers from offering interest that is economically equivalent to a bank deposit on passive balances, while allowing rewards tied to trading, payments, and other usage-driven incentives. Circle does not directly offer passive yield on USDC balances; instead, partners like Coinbase use distribution arrangements and activity-based rewards programs. Bernstein's analysis, led by Gautam Chhugani, suggests this language protects those structures and closes off scenarios where less-liquid issuers could gain market share purely by outbidding on rates.

Bernstein's Bullish Calls on Circle and Coinbase

Bernstein rates Circle an Outperform with a $190 price target, implying roughly 67% upside from its May 15 close of $114. Coinbase also received an Outperform rating with a $330 price target against a $195.43 close. The research firm sees AgenticPayments as a longer-range growth driver for Circle, particularly the x402 protocol that enables software to pay other software, opening new use cases beyond traditional finance.

While Tether remains the largest stablecoin by market cap, the CLARITY Act's yield compromise could erode its competitive advantage in certain segments. Tether has historically offered higher yields on its reserves to partners, but the new regulation may limit such practices. However, Tether's deep liquidity and widespread adoption across exchanges and DeFi protocols provide a moat that is not easily challenged.

Original analysis: The $300 billion milestone underscores the growing integration of stablecoins into the global financial system. Yet the regulatory divergence between the US and other jurisdictions could fragment liquidity. The CLARITY Act, if enacted, would create a clear framework for US-based issuers like Circle, while Tether's offshore structure may face increasing scrutiny. Investors should watch for how the bill's passage influences market share shifts and whether USDC can sustain its volume growth trajectory.

Sources: CoinMarketCap Academy - AI Sector Bleeds $2.8B | CoinMarketCap Academy - CLARITY Act Yield Compromise

1. Total dollar-backed stablecoin supply reached a record above $300 billion.
2. USDC's share of adjusted transaction volumes increased from 41% to 60% year-over-year.
3. The CLARITY Act's yield compromise structurally benefits Circle by protecting its distribution and incentive structures.
4. Bernstein rates Circle Outperform with a $190 price target, implying 67% upside.
5. Annualized stablecoin transaction volumes are on track for $100 trillion, double the 2025 figure.