Circle applies to be a 'bank'

Snapshot

• Circle files for a national trust bank charter
• It would enable custody of USDC stablecoin reserves and tokens
• Marks a significant milestone for the "internet financial system"

Circle Internet Group is following up June's IPO success by taking another step into the finance mainstream, by applying for a national trust bank charter.

The application to the US Office of the Comptroller of the Currency was submitted on June 30, and, if approved, will mark a key federal rubberstamp to further validate crypto's regulatory progress.

It follows Circle's IPO, which valued the blockchain and stablecoin company at nearly 18 billion earlier this month.

“Establishing a national digital currency trust bank of this kind marks a significant milestone in our goal to build an internet financial system that is transparent, efficient and accessible,” CEO Jeremy Allaire said in a statement.

"We will align with emerging US regulation for the issuance and operation of dollar-denominated payment stablecoins, which we believe can enhance the reach and resilience of the US dollar, and support the development of crucial, market neutral infrastructure for the world’s leading institutions to build on.”

Unlike commercial banks, the proposed First National Digital Currency Bank, would not accept cash deposits or make loans, but it would act as custodian for USDC reserves and digital assets on behalf of institutional clients.

Circle is the issuer of the dollar-pegged USDC stablecoin, which facilitates instant fund transfers for its users, including crypto traders.

Currently, Circle’s reserves (comprising short-dated U.S. Treasury bills, overnight repurchase agreements and cash) are held in custody at BNY Mellon and managed by BlackRock.

Under the new charter, Circle would transfer its USDC reserve management to the trust entity, while continuing to hold a portion of assets at major banks.

Allaire said the bank will focus on custody for tokenized stocks and bonds rather than traditional cryptocurrencies like Bitcoin and Ether.

The move comes as Congress advances legislation to establish a federal regulatory framework for stablecoins, requiring issuers to back tokens with liquid assets and publish monthly reserve disclosures.

Currently, only one other, Anchorage Digital remains the only digital-asset company with a national trust charter.

Elsewhere, Circle also announced the launch of a 'crosschain' user experience called 'Circle Gateway', designed to make it easier to deliver "instant crosschain liquidity".