Circle, the issuer of the USDC stablecoin, has applied for a national trust bank license in the U.S.
Circle Applies for License
Circle has submitted its application for a banking license, following its IPO on June 5, which valued the company at $18 billion. According to Reuters, the financial institution will be named First National Digital Currency Bank, N.A. If approved, the Circle Banking License will allow the organization to hold its own reserves and manage digital assets for large clients.
Significance of the New License
The Circle Banking License differs from a traditional bank status as it does not allow for accepting cash deposits or providing loans. However, it will enable the company to:
* Safely hold its own USDC reserves * Store tokenized assets like stocks and bonds on the blockchain * Offer custody services to institutional investors.
Currently, the company’s reserves are held by BNY Mellon and managed by BlackRock.
Market Response and Future of Crypto
If the license is granted, Circle will join only a handful of crypto firms in the U.S. with this type of status, reflecting the industry's readiness to operate under U.S. regulations. Meanwhile, the Genius Act, concerning stablecoins, has passed the Senate and is expected to be voted on by the House of Representatives soon. This sets the stage for compliance with new regulatory standards, which may enhance trust in USDC and other stablecoins.
The Circle Banking License represents a significant step in demonstrating how the digital asset sector is evolving. Robust regulations can lead to stronger trust in cryptocurrencies and facilitate their integration into traditional finance.
