Circle stock surges on two key announcements

Shares of Circle Internet Group Inc. (NYSE: CRCL) surged 20% on May 4 after two major breakthroughs.

Circle is a major cryptocurrency company that is popular for its USDC stablecoin. As the name suggests, a stablecoin is a type of cryptocurrency that keeps its value stable, unlike volatile cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH).

Related: Explained: What is a stablecoin?

Circle's USDC is pegged 1:1 to the U.S. dollar. As per DeFiLlama, it has a market cap of $77.34 billion and accounts for 24% of the total stablecoin market cap at press time.

Compromise on CLARITY Act

On May 1, Punchbowl News reported that Sens. Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) had finalized a compromise to restrict stablecoin rewards in the CLARITY Act.

The text of the draft, seen by the publication, bans rewards on passive stablecoin holdings that are “economically or functionally equivalent” to deposit interest. However, it allows rewards for stablecoin activities like trading, transactions or staking.

Responding to the compromise on the bill, Circle founder and CEO Jeremy Allaire said that stablecoins represent the "highest utility form of money ever invented" and incentives will only drive their adoption.

The crypto industry will benefit from advancing U.S. leadership here, which is vital to the national interest, he added.

The latest compromise comes after months of bitter negotiation between the banking and crypto industries. While the former feared that stablecoin rewards would lure savings account holders away, the latter complained of being subjected to anti-competitive norms.

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Circle wins new approval

Circle received approval from France's Autorité des marchés financiers (AMF) on Apr. 20, the company announced on May 4.

The approval allows Circle to provide crypto-asset services under the Markets in Crypto-Assets (MiCA) framework prevalent in the European Union. It enables Circle France to offer custody and transfer services for its stablecoins, USDC and EURC.

Following these announcements, Circle's stock surged as much as 20% to hit the intraday high of $119.99 on May 4. At press time, it was trading at $118.13.

Related: Over 100 crypto firms call on Senate to move forward with Clarity Act