Circle Applies for US National Trust Bank Charter to Manage USDC Reserves

Stablecoin issuer Circle has formally applied to the U.S. Office of the Comptroller of the Currency (OCC) to establish a national trust bank, a significant move following its recent initial public offering (IPO) that valued the company at nearly $18 billion. If approved, the new entity, to be named First National Digital Currency Bank, N.A., would allow Circle to act as a custodian for its own USDC reserves and hold other crypto assets for institutional clients.

This proposed charter, unlike a traditional banking license, would not permit Circle to accept cash deposits or issue loans. Jeremy Allaire, CEO of Circle, told Reuters that this step is a "continuation" of Circle's long-standing pursuit of "the highest standards of trust, transparency, governance, compliance." Currently, Circle's USDC reserves are held in custody at BNY Mellon and managed by BlackRock; the new entity would manage a portion of these reserves, with some continuing to be held at major banks. Allaire indicated that the bank would prioritize custody for tokenized assets like stocks and bonds over traditional cryptocurrencies such as Bitcoin and Ether.

Circle's application comes as the U.S. Congress is nearing the passage of a bill aimed at creating a federal regulatory framework for stablecoins. The proposed legislation, which passed the Senate earlier this month and is expected to pass the House this summer, would require stablecoins to be backed by liquid assets and issuers to publicly disclose reserve compositions monthly. Allaire noted that the company is preparing for a future where stablecoins are more widely adopted by traditional financial institutions and retailers, stating, "We're going from the early-adopter phase of this technology into the mainstream." Wall Street brokerages initiating coverage on Circle have generally issued bullish ratings, though some analysts have expressed concerns regarding its elevated valuation after its stock more than doubled since its market debut.