Original | Odaily Planet Daily (@OdailyChina)

Author | Azuma (@azuma_eth)

On May 11, the Q1 financial report, on May 14, the Senate vote on the CLARITY Act, and on May 15, the Federal Reserve’s leadership renewal… Circle (CRCL) will face three significant tests this week, and each challenge will directly impact the price trend of CRCL and may even redefine its valuation logic.

In the following text, Odaily Planet Daily will analyze the progress and expectations of these three major events and predict their potential impact on CRCL (Odaily note: the following content does not constitute any investment advice).

Event One: Q1 2026 Financial Report

At 20:00 tonight, Circle will release the Q1 2026 financial report before the U.S. stock market opens, followed by a financial report conference call.

The key points of this financial report are three.

• The first is Circle's comprehensive revenue data and profit data for Q1 this year, with current market expectations for Circle's Q1 revenue at $715 million, and earnings per share (EPS) expected to be $0.178.
• The second is the proportion of Circle’s distribution costs (mainly paid to Coinbase) relative to total revenue, which represents Circle's reliance on distribution platforms like Coinbase. This proportion has shown a slight decline over the past few quarters, and Q1 is expected to continue this trend.
• The third is the growth status of non-interest income, which is the revenue obtained from payments, enterprises, on-chain activities, etc. This is the most important long-term data for Circle, representing whether it can find a second revenue mainline beyond U.S. Treasury benefits.

Regarding the distribution contract with Coinbase, analysts will surely ask about this question during the earnings call, and Circle's answer will be crucial. In August 2023, Circle signed a three-year contract with Coinbase, which stipulates that Coinbase will receive all interest income generated by USDC on its platform, while interest income generated by USDC outside the platform will be split 50% between Coinbase and Circle.

This contract will expire in August this year, but last week, the Coinbase CFO emphasized that this contract is “renewed every three years, remaining unchanged,” and continuing to renew under the original terms would definitely be unfavorable for Circle. However, considering the current financial pressure on Coinbase and strong reliance on Circle — contracts are negotiated, which may become a favorable factor for Circle to pursue changes in the distribution terms.

• Odaily note: See “Q1 net loss of $394.1 million, Coinbase can only cling to Circle's leg.”

Personally, I hold a cautiously optimistic attitude toward tonight's financial report, expecting stable performance, but the focus will be more on Circle's stance regarding the August renewal.

Event Two: CLARITY Act Senate Vote

On May 14 local time in the U.S., the Senate Banking Committee will conduct a voting hearing on the “Digital Asset Market Transparency” Act (CLARITY Act), which will be a key step for the CLARITY to move forward in the Senate and become formal legislation.

The CLARITY Act aims to establish a regulatory framework for digital assets, clearly distinguish the classification of digital assets, and delineate the regulatory responsibilities of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

On July 17 last year, the CLARITY passed the House of Representatives with an overwhelming majority (approximately 294-134 votes), but faced resistance during its transfer to the Senate due to divisions among various forces.

The controversy mainly revolves around stablecoin yields, regulatory approaches to DeFi, and ethical standards concerning the Trump family, particularly the issues related to stablecoin yields, where the banking industry has had fierce confrontations with the crypto industry, leading to Coinbase withdrawing from the negotiation table, which stalled the bill’s progress (recommended reading “Why Must Banks Suppress Stablecoin Yields?”).

A crucial shift has recently occurred, as Senator Thom Tillis and Angela Alsobrooks have reached a compromise proposal that would prohibit offering yields on static stablecoin reserves, while allowing rewards on active stablecoins.

Currently, on the prediction market Polymarket, the probability of the CLARITY becoming a law this year is as high as 76%, indicating a relatively optimistic outlook for the bill’s subsequent progress.

Once the CLARITY becomes formal legislation, it will establish a clear and functional federal regulatory framework for the U.S. digital asset market, addressing long-standing issues of regulatory ambiguity and inconsistent enforcement. This will be significant good news for all industry participants, including Circle. I am relatively optimistic about this prediction.

Event Three: Federal Reserve Leadership Change

On May 15, Jerome Powell's term as chair of the Federal Reserve will officially end (he will remain as a governor until 2028), with his successor being Kevin Warsh.

On April 29, the Senate Banking Committee voted to approve Warsh’s nomination; although it has not yet been confirmed by a full Senate vote, it is expected to happen in the next few days.

Unlike Powell, Warsh's stance is an unconventional combination of “balance sheet reduction + interest rate cuts,” supporting controlling inflation through asset balance sheet reduction (QT) while providing liquidity to the real economy through interest rate cuts, arguing that balance sheet reduction targets the financial sector, while interest rate cuts benefit the real economy.

For Circle, which still primarily relies on U.S. Treasury benefits as a revenue source, a market shift towards interest rate cuts will have a direct negative impact on CRCL; meanwhile, balance sheet reduction may tighten financial market liquidity in the short term, suppressing the stock market.

However, Warsh himself is a cryptocurrency holder; he is historically the first Federal Reserve chair to have directly invested in the cryptocurrency sector and places great importance on “the digital upgrade of U.S. financial competitiveness.” Warsh has also explicitly opposed the Federal Reserve issuing an official CBDC, believing that its credit is deeply bound to national sovereignty, and that if U.S. dollar credit is damaged, the CBDC will also collapse; hence he hopes to incorporate private stablecoins such as USDC into the Federal Reserve's regulatory system, making them "shadow dollars."

So, in the long run, Warsh’s ascension is expected to provide certain policy tailwinds for Circle's business, aiding its expansion.

If we talk about expectations, the short term may lean toward pessimism, but the long term may turn neutral or optimistic.

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