Circle Files for National Trust Bank Status to Expand Digital Asset Services

Circle, the company behind the USDC stablecoin, has taken a significant step into the realm of regulated finance. Following a public listing that valued the company at nearly $18 billion, Circle has filed an application to become a national trust bank in the United States. If approved by the Office of the Comptroller of the Currency, the new entity, named First National Digital Currency Bank, N.A., would enable Circle to act as a custodian for its reserves and offer secure digital asset services to institutional clients. However, unlike traditional banks, it would not be permitted to accept cash deposits or issue loans.

Circle plans to manage the reserves backing its stablecoin, which include short-term US Treasury bills and cash, currently held at BNY Mellon and managed by BlackRock. Some of these holdings will remain with existing partners even if the new bank becomes operational. This move aligns with Circle's goal of transitioning from the early-adopter phase of technology into the mainstream. As a public company, and with the potential approval from the OCC as a national trust, Circle aims to provide a foundation that leading institutions will be comfortable building on.

Circle's focus will be on the custody of tokenized assets such as stocks and bonds on blockchain rails, rather than cryptocurrencies like Bitcoin and Ether. This focus aligns with broader trends as financial institutions increasingly explore blockchain to modernize traditional markets. The timing of Circle’s move is significant, as the Senate recently passed a stablecoin bill that would require issuers to maintain full reserves and disclose them publicly each month. The House is expected to vote on the bill in the coming weeks, and the President has signaled support for such regulation.

If enacted, the legislation could legitimize stablecoins in the eyes of more traditional businesses and pave the way for broader use in payments and commerce. Circle, which already plays a central role in the stablecoin market, is preparing to meet that moment with a more regulated and institution-friendly structure. This strategic move positions Circle to capitalize on the growing acceptance and integration of stablecoins into the mainstream financial system.