Circle Applies for National Trust Bank Charter to Manage USDC Reserves

Circle Internet Group, the issuer of the USDC stablecoin, has formally applied for a national trust bank charter from the U.S. Office of the Comptroller of the Currency. This move was announced in a press release on June 30. If approved, the new entity, First National Digital Currency Bank, N.A., would be authorized to manage the reserves backing USD Coin (USDC) and offer digital asset custody services to institutional clients under federal oversight. This would allow Circle to function as a trust institution subject to federal regulation, similar to Anchorage Digital, one of the few cryptocurrency companies licensed to do so. However, it will not accept deposits or issue loans like a traditional bank; instead, the trust charter would allow Circle to hold crypto and tokenized financial instruments on behalf of clients.

This application marks a significant step in Circle’s efforts to integrate stablecoins into the regulated U.S. financial system. It comes as U.S. lawmakers advance the GENIUS Act, a proposed federal framework for stablecoin issuers, and follows Circle’s successful public listing on the New York Stock Exchange. The trust charter application aligns with expected requirements under the bill, which would mandate full backing by liquid assets and transparent monthly reserve disclosures. The GENIUS Act passed the Senate earlier this month and is awaiting House approval, with the President expected to sign it into law.

Currently, Circle’s USDC reserves, composed of short-term U.S. Treasury bills, repurchase agreements, and cash, are held at institutions like BNY Mellon and managed by BlackRock. With the creation of a trust bank, Circle plans to take a more direct role in overseeing reserve management, though some assets will remain with external custodians. Circle would be able to offer more custody options than just stablecoins thanks to the charter. The company aims to support tokenized versions of traditional financial instruments, such as stocks and bonds, rather than volatile cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH).

Circle has a history of regulatory firsts, including being the first recipient of the NYDFS BitLicense in 2015 and becoming the first global stablecoin issuer to comply with the EU’s Markets in Crypto-Assets Regulation rules in 2024. Earlier this year, it also received preliminary approval to operate in Abu Dhabi’s financial free zone. This move is part of Circle's proactive steps to strengthen its USDC infrastructure and align with emerging US regulations for the issuance and operation of dollar-denominated payment stablecoins.

If approved, the national trust bank would operate under the oversight of the OCC, rather than having to apply for individual state-based money transmitter licenses or specific digital currency licenses. This would allow Circle to offer custodial services and operate nationally, strengthening the infrastructure that supports the issuance and circulation of USDC. Additionally, the bank would provide digital asset custody services to institutional customers. Circle's application comes as the proposed GENIUS Act, which passed the US Senate on June 17 and moved to the House of Representatives, is set to face another vote before possibly becoming law. A federally regulated trust charter would help Circle meet the requirements under this proposed act. National Trust Bank applications to the OCC are subject to a 30-day comment period, and the regulator usually decides to approve or reject within 120 days after receipt of a complete application.

Circle is not the only crypto firm seeking to establish a national trust bank under the oversight of the OCC. Other firms, including the digital currency wing of financial services giants, are also applying for a national bank charter license from the OCC. Anchorage Trust Company became the first crypto firm to receive a license from the OCC in January 2021, converting into Anchorage Digital Bank. Circle's application for a national trust bank charter is a significant step towards enhancing the stability and regulatory compliance of its USDC stablecoin. By directly managing its reserves and offering digital asset custody services, Circle aims to strengthen its position in the stablecoin market and align with emerging US regulations. The approval of this application would bring Circle under direct OCC oversight, aligning it with how traditional financial institutions are regulated.