Why Circle Internet Stock Jumped 17% Today

Shares of Circle Internet Group (CRCL 20.92%) have been volatile in this so-called "crypto week" on Capitol Hill. For instance, the stock fell 4.6% on Tuesday as lawmakers stumbled over a procedural issue, probably delaying any votes on several cryptocurrency regulation bills. But Circle's stock soared on Wednesday, gaining 17.1% by 1:25 p.m. ET. The procedural roadblocks may clear up today, perhaps getting the crypto week regulatory actions back on track -- and that's not all. Crypto drama on Capitol Hill Beyond the new signs of progress on the pending crypto bills, the Trump administration is facing off against the Federal Reserve. Several news outlets said that Trump wants to fire Fed chairman Jerome Powell, whose careful management of interest-lowering moves doesn't always align with the White House's agenda. Circle Internet keeps a close eye on the Fed's interest rate adjustments. The company makes money almost exclusively by earning interest on its massive cash reserves, which are backing the constant $1 value of the USDC (USDC 0.00%) stablecoin. Lowering the federal interest rate by 1 percentage point would lower Circle's bottom-line earnings by at least $500 million, based on the $44 billion Circle held in reserve for USDC support at the end of 2024. USDC's market value has risen to $63.3 billion since then, which increases the impact Federal interest rates will have on Circle's financial results. Today's soaring stock price suggests that investors expect turmoil and maybe even higher interest rates if Trump pushes out Powell. Image source: Getty Images. What's next? Trump has denied that he's planning to fire Powell, and the executive branch may not have the authority to remove Federal Reserve officials anyhow. So it remains to be seen how the political pressure might affect Powell's rate adjustments. Today's huge price jump wouldn't make sense without the congressional voting drama amplifying the Fed speculation. In the best of all worlds, the cryptocurrency market could end this week with a long-awaited regulatory framework. Whether the rules are implemented under Powell or another Fed chair, crypto investors are craving regulatory clarity. As the manager of a leading stablecoin, Circle Internet is a useful bellwether of the political developments around crypto. Furthermore, Circle just set Aug. 12 as the date for its first financial report as a public company. I can't wait to see the stablecoin issuer's real-world results in black and white.