Circle’s Trust Bank Ambitions
The company Circle, known for the stablecoin named USDC, is applying to be a U.S. national trust bank. If the Office of the Comptroller of the Currency (OCC) approves the new bank, which will be called “First National Digital Currency Bank, N.A.,” it will manage the USDC reserve as well as provide digital asset custody services to enterprise customers.
Aligning with U.S. Regulation
This action demonstrates Circle’s commitment to complying with federal scrutiny, as well as trust in its cryptocurrency stablecoin for USD. National trust banks do not accept deposits or make loans. However, they are permitted to provide custody services. Moreover, they are regulated by the federal government instead of having to register with each state.
“Circle CEO Jeremy Allaire states the decision is a preemptive move to boost the infrastructure behind the USDC.”
The move also places the firm to meet the standards of the GENIUS Act — a new bill regulating stablecoins that recently passed U.S. Congress. The House of Representatives is currently examining it after it passed the Senate.
Future of USDC
According to Allaire, we are differentiating ourselves from the emerging U.S. regulation for digital currencies backed by the dollar. According to the team, that application is an important move towards the long-term sustainability and legitimacy of USDC.
Growing Institutional Interest
Circle is not alone in its pursuit. Other major crypto companies, including Fidelity Digital Assets, are also reported to seek similar trust bank licenses with the OCC.
There’s a larger trend happening in the crypto space right now, and that’s moving away from dodging regulation and rather towards trying to integrate into traditional finance.
Approval Process and Market Impact
The national trust bank charters go through an approval process that begins with a 30-day public comment period followed by a 120-day review. Should Circle be granted the waiver, the firm will be able to simplify the operations and further position USDC as a fully compliant, trusted stablecoin as regulatory push intensifies around digital assets.
Following the public market debut of Circle this year, where the stock gained over 160% on the first day of trading. While the share price of the firm is now stable, getting regulatory clarity through the bank charter could be a growth driver.
Global Expansion
Circle is also expanding globally. Abu Dhabi has recently given the preliminary green light to a money services provider, alongside its great news of receiving a license from the French banking authority compliant with the EU’s Markets in Crypto-Assets (MiCA) regulation.
Race to Lead the Stablecoin Market
With growing competition in the stablecoin space, Circle’s attempt to win the status of federally regulated trust bank shows its desire to dominate the digital dollar space.
