Circle Internet Group Inc. has secured approval from the Comptroller of the Currency to establish a new national bank, marking a significant step for the stablecoin issuer into federally regulated banking. The bank, to be known as Circle National Trust, received conditional approval in December after the company submitted its application last June.
The move puts it in a position to offer custody services for digital assets directly, focusing on banks and other financial institutions. According to the company’s business plan, these services will be provided “depending on demand.” The charter could also bring management of Circle’s USDC Reserve under federal regulatory oversight, which the company says would strengthen “safety, transparency, and trust” for the token.
A trend among payments players
The firm is not alone in seeking direct access to a wider range of financial services. Its venture into bank ownership is the latest example of payments players acquiring or starting financial institutions to gain more control over their operations. This trend has been building as companies look to reduce reliance on third-party banking partners.
Stablecoins have grown in prominence as payment tokens for cross-border transactions and hold promise for faster settlement of everyday consumer payments. Government supervision has become a key building block for user trust in these digital tokens, making Circle’s federal bank charter a notable development in the sector.
Jeremy Allaire, Circle’s cofounder and chief executive, said in a statement that federal oversight “sets a new standard for transparency, governance, and scale for Circle’s infrastructure and unlocks a new phase of adoption, where leading financial institutions can build on public blockchains with clarity and confidence.”
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The stablecoin market
The company ranks second globally among stablecoin issuers. Its USDC token has a market capitalization of approximately $75 billion, according to CoinMarketCap. Tether Ltd. remains the top issuer with a market cap of $183 billion, nearly two and a half times larger.
Last month, the firm agreed to acquire Cybavo, a Taiwan-based developer of tools for digital-asset custody and blockchain development. The acquisition is expected to boost adoption of USDC as governments and businesses explore digital versions of national currencies.
The terms of that deal were not disclosed.
The approval of Circle’s banking plan comes at a time when regulators are paying closer attention to the intersection of traditional finance and digital assets. The company’s new charter will subject its reserve management of the token to federal oversight, a level of scrutiny that smaller issuers have not typically faced.
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