Circle (NYSE: CRCL) has applied for a license from the US Office of the Comptroller of the Currency (OCC) to establish a national trust bank in the United States that would allow the company to act as a custodian for the reserves of its flagship product, the USDC stablecoin, and other digital assets on the behalf of its institutional clients.
If approved by the OCC, the Circle First National Digital Currency Bank would be authorized to operate as a federally regulated trust entity. Unlike traditional banks, the license would not allow the stablecoin giant to accept cash deposits or issue loans.
Stablecoin Giant Circle Applies for Bank Charter License to Manage USDC Reserves
With a federal bank charter, Circle aims to strengthen the infrastructure supporting the issuance and circulation of USDC while offering digital asset custody services to institutional customers.
In a statement released on Monday, Circle co-founder, chairman, and CEO Jeremy Allaire said that a national digital currency trust bank marks a significant milestone in the company’s goal to build an internet financial system that is “transparent, efficient, and accessible.”
While National Trust Banks cannot accept cash deposits or give loans, they are allowed to offer custodial services and operate on a national scale under the oversight of the OCC. This exempts them from having to apply for individual state-based money transmitter licenses or specific digital currency licenses.
The charter also allows Circle to directly oversee its USDC reserves – including short-dated US Treasury bills, overnight US Treasury repurchase agreements, and cash, which are currently held at the Bank of New York Mellon (BNY), and managed by BlackRock (NYSE: BLK).
Alliare said the company will focus on providing digital asset custody services on behalf of institutional customers for stocks and bonds tokenized on the blockchain, over traditional cryptocurrencies like Bitcoin and Ether.
Bank Charter Would Guarantee Compliance With the US GENIUS Act for Stablecoins
Circle also noted in its statement that a federally regulated trust charter would also help USDC meet compliance requirements under the GENIUS Act. The stablecoin legislation cleared the US Senate vote on June 17 and has been forwarded to the House of Representatives, where it will face another round of voting before it’s sent to the White House to be signed into law by President Donald Trump.
If enacted as law, the GENIUS Act could pave the way for traditional financial institutions and retailers to incorporate stablecoins into their businesses. Allaire said that Circle is preparing for the market opportunity it presents.
He also pointed out that with a national trust charter, Circle is taking “proactive steps” to strengthen its USDC infrastructure and align itself with emerging US regulation for the issuance and operation of dollar-pegged “payment” stablecoins, which the company believes can enhance the “reach and resilience” of the US dollar and support the development of “crucial, market-nuetral infrastructure” for the world’s leading institutions to follow through.
As per the guidelines, National Trust Bank applications to the OCC are subject to a 30-day comment period. The regulator usually decides whether to approve or reject an application within 120 days after receipt.
Coinbase, Paxos, and BitGo Among US Crypto Firms Seeking Bank Charter from the OCC
Circle has been considering a bank charter license since at least 2022, but it won’t be the first crypto firm to obtain it. In 2021, Anchorage Trust Company, a digital asset custody firm, was granted the first US national crypto bank charter.
Anchorage Digital Bank, as it’s called now, primarily serves institutional clients and engages in initiatives such as custody, trading, staking, lending, and borrowing of digital assets. It provides Bitcoin-backed loans of up to $2 billion. Anchorage remains the only federally chartered crypto bank in the US.
Several US crypto firms, including Coinbase (Nasdaq: COIN), BitGo, and Paxos, are actively pursuing a bank charter license to integrate more closely with the traditional financial system and gain better legitimacy by complying with regulatory requirements.
BitGo is seeking a full banking charter, one that would cover traditional banking services such as deposits and loans. Meanwhile, Paxos was granted a preliminary conditional approval for a US bank charter by the OCC in 2023.
However, the process of obtaining a bank charter is complex, expensive, and cumbersome. It involves meeting stringent regulatory requirements, including establishing robust anti-money laundering (AML) programs and complying with the Bank Secrecy Act (BSA), costing millions of dollars to applicants.
Circle’s move comes less than a month after the company went public on the New York Stock Exchange (NYSE). Its stock, CRCL, jumped from the IPO debut price of $31 to a peak of about $299 within the first two trading weeks. CRCL finished Monday’s session up less than a percentage point at $181.29, and has continued to move upwards in after-hours trading.
