USDC Issuer Circle Mulling Applying for US Crypto Bank Charter
Circle, the issuer of the second-largest stablecoin in the market by reported market cap, USDC, is poised to submit an application to operate as a bank in the US, Bloomberg reports, April 13, 2022.
Circle to Function as a Regulated US Bank
Circle, the company behind USDC — the second most popular dollar-pegged stablecoin with a market cap of more than $50 billion at the time of writing – recently said it’s closer to submitting an application to operate as a bank in the US.
The company first disclosed its intention to become a crypto bank last year in August and has continually held discussions with regulators ever since. The firm’s CEO, Jeremy Allaire, however, declined to comment as to when the company would submit the application. He only mentioned that it would be “hopefully in the near future.”
Most recently, Circle raised $400 million from the largest asset manager in the world, BlackRock Inc., and Fidelity Management and Research LLC, among others.
The company aims to go public by merging with a special purpose acquisition firm in a deal that is valued at a whopping $9 billion.
For the uninitiated, bank charters are overseen by the US Office of the Comptroller of the Currency. The institutional as already discussed a range of topics with Circle management pertaining to its banking aspirations.
Some of the matters discussed include interoperability between blockchains and how to gauge operational risks of a specific blockchain, Allaire added. Notably, a representative for the OCC refused to comment on the conversations with Circle.
As reported by crypto.news, recently hackers orchestrated a $600 million attack on the leading play-to-earn game Axie Infinity’s Ronin Bridge, rekindling concerns pertaining to connections among blockchains.
The Bloomberg report reads in part:
“If approved, Circle would be the fourth federally chartered crypto bank in the U.S. Those that have secured at least preliminary approval for a charter are Anchorage Digital, Protego Trust Bank NA and Paxos Trust Company. Getting a bank charter could be key to Circle’s future. The Federal Reserve and other U.S. watchdogs have said stablecoins need more regulation and should be issued by banks.”
In a recent interview in Miami, Allaire said that Circle is “making good progress” to submit a formal application with the OCC. These comments by the Circle CEO were interesting as lately the US has tightened its grip around crypto institutions and discouraged banks for outwardly engaging in crypto activities.
Notably, the US hasn’t provided a new banking charter to any crypto-focused company in almost a year.
Allaire added:
“They’ve been doing a lot of work laying the groundwork for how they’re going to supervise crypto, how they’re going to supervise stablecoin issuers specifically.”
In similar news, crypto.news reported on April 1 that Circle had selected BNY Mellon as the principal custodian for USDC reserves.
