Crypto firm Circle to apply for a banking license as ‘National Digital Currency Bank’

Circle, a Boston-based crypto firm behind the USD Coin (USDC) stablecoin, announced plans to become a full-reserve national commercial bank, operating under the supervision and risk management requirements of the Federal Reserve, the Treasury Department, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation. The news comes amid the company’s plans to go public through a merger with a special-purpose acquisition company.

Why should we care?
If Circle is successful with its charter application, it will likely raise the bar for compliance requirements among crypto firms. Circle is the world’s second largest stablecoin issuer, and becoming a bank would also draw a deeper line in the sand between Circle and Tether, its larger rival that’s currently under criminal investigation. “Establishing national regulatory standards for dollar digital currencies is crucial to enabling the potential of digital currencies in the real economy, including standards for reserve management and composition,” the company’s CEO Jeremy Allaire said in a statement. The timing of Circle’s plans to become a bank aligns with signals from regulators that tighter rules may be coming to the crypto industry. Applying for a banking license allows it to “get in front” of the advent of rising regulatory barriers. “By signaling its intent to become a bank and drawing attention to its business model, Circle can also showcase USDC as a stablecoin rather than a cryptocurrency,” one analysis said. More than $27.5B of USDC is in circulation, according to Circle. As of Monday afternoon, the Office of the Comptroller of the Currency confirmed that it had not received a charter application from Circle.