Banking groups lobby to tighten stablecoin rules as Circle stock slides

The banking groups specifically targeted Section 404 of the proposed legislation, arguing that the existing language fails to prevent stablecoin issuers from offering interest-like incentives. They warn that these yield-driven mechanisms risk accelerating deposit flight, particularly from regional and community banks. The push for tighter boundaries comes as the bill’s path through the Senate faces mounting obstacles, with internal estimates suggesting the probability of passage has dwindled to 37% ahead of the August 7 recess.

Circle’s stock is currently testing a critical technical floor, trading near $61. This sits uncomfortably close to a major Fibonacci support level at $59.39. Market indicators reflect this bearish sentiment, with the Chaikin Money Flow holding at -0.39, signaling consistent capital outflows. Despite these headwinds, institutional support remains visible; ARK Invest recently acquired $13.8 million in shares, and Circle maintains a federal trust bank charter. Nevertheless, analysts at Baird have lowered their price target to $100, citing potential revenue shortfalls and increased competition from new entrants like the OUSD stablecoin.