Circle Internet Group shares plummeted 22% on Tuesday, their steepest intraday drop ever, as investors reacted to potential regulatory changes threatening its USDC stablecoin rewards program and intensified competition. The decline, which saw Circle fall as much as 22% and Bitcoin drop below $70,000, sent shockwaves through crypto-linked equities, with Coinbase and Robinhood also losing ground. Concerns center on the proposed Clarity Act, which could prevent exchanges from offering rewards like Coinbase's 3.5% on USDC balances, fundamentally altering stablecoin economics and reducing incentives for holders to keep funds in tokens rather than bank deposits. Tether's move towards a full US audit fueled speculation about entering the US market, adding competitive pressure.

Circle's stock, which surged 750% post-IPO last year on stablecoin optimism, is now down over 60% as crypto prices fell and regulatory uncertainty mounted. The firm's future hinges on navigating these regulatory headwinds and competitive threats.